In back to back meetings on Tuesday, June 21 the Salida City Council moved rapidly through three major topics. During the first (work) session, discussions were held regarding two topics of interest to all Salida residents – ballot questions and the 2023 budget.
Potential 2022 Ballot Questions
Conveyance of the Salida Community Center Property to Senior Citizens, Inc.
There was widespread support expressed to return ownership to the current operators, as it was structured years ago.
Council members felt that the Center’s strong board offers many services to the public, they attract a large contingent of hardworking volunteers and fundraising efforts and take great pride in maintaining the Center. Mayor Shore said that having ownership (vs. being a tenant) would help the Center with greater certainty when they apply for capital improvement grants.
City Attorney Nina Williams pointed out deed restriction language that the property could not be sold to a new owner if they did not operate it as a nonprofit. City Administrator Drew Nelson suggested language in the deed that would also give the City a first right of refusal in case of any subsequent property transfer, again protecting city residents’ interests.
- Tax on Licensees for Short Term Rentals
Again, there was support for charging a flat license fee to the owners of short-term rentals to provide additional sources of funding to help with workforce funding. It was noted that some 70 percent of license holders are from out of the area. Council Member Pappenfort asked if were possible to apply a lower fee to those local property owners who use the income to offset their mortgages (not run it as a pure business). Williams agreed to look further into this, believing there might be some constraints since Salida is still a statutory city. Even if not immediate, this might be reconsidered if and when “Home Rule” ever was adopted. The talk then focused on an appropriate dollar amount.
Treasurer Bergin asked about the potential amount of new revenue and how it might specifically be promoted to the public; i.e., to be used for a specific project, a land bank or some other tangible purpose. With approximately 200 licensees and a council-suggested amount of $5,000 for each, this could raise $1 million annually.
Council Member Pappenfort also advocated for a “sunset clause” and there was some agreement about that, though no date certain. City staff and the city attorney felt they had enough guidance to fine tune this question for future consideration, before the August deadline to get any of these questions on the November ballot.
- Increasing the Occupational Lodging Tax (OLT)
Moving to the third potential ballot question, it would be a simple matter for the OLT (currently at $3.66 per occupied room per night) to go to $4.82. This is the amount voters previously authorized, a cap that has not changed in fourteen years.
Raising the rate beyond $4.82 would require a ballot question as would the more significant change to allow (some or all of) the proceeds to be dedicated to workforce housing – now these monies must support the Hot Springs Aquatic Center and Steam Plant. It was pointed out that this tax falls on the guest, not the homeowner or the business, who passes the cost along. Attorney Williams also said she would ask the City Clerk for the current number of room nights to calculate the annual potential.
Pappenfort suggested raising the cap to $10 per occupied room per night (perhaps over time) and all agreed to keep it per room (as hotels do), not per dwelling . Mayor Shore pointed out that hotels already pay commercial property taxes and in fairness, that the city might only target the higher OLT to short-term rentals (STRs).
Council Hears 2023 Budget Development Kickoff
Finance Director Aimee Tihonovich then provided an overview of the 2023 City Budget process, the highlights of which had been discussed at the Finance Committee meeting earlier the same day. Her introductory remarks focused on the city’s primary “General Fund” and set the tone for what the city might expect in 2023. “We’re going to have less funds than we’re used to, so we’re going to have to be a little more careful…and we’re seeking your guidance on what your top priorities are” she said.
Tihonovich based her assessment on an assumption that city sales tax collections (the major revenue driver) would be flat again in 2023 as they were budgeted (flat) for this year. Balancing revenues against the current “base budget” (the expense level it would take to run current programs and staffing), there remained about $700,000 of “available” funds.
With a $400,000 average amount needed to fund typical capital items and $200,000 for a key program to develop the Vandaveer Ranch Master Plan, about $100,000 in purely “discretionary” funding might be available, before tapping into any of the healthy reserves the city holds. Tihonovich reminded the council that with the high priority of a $9-12 million fire station, the city needs to start planning for an estimated $1 million per year in debt service, starting in 2024 and that in itself would pull on existing available reserves.
The picture is not as cloudy as it might first seem and was described as a “worst-case” snapshot. The city actively pursues grants and departments exercise tight spending control. Finally, given the ever-increasing number of people visiting or moving to the county, the volume of retail and accommodations/foodservice transactions is likely to trend up, albeit at the more typical rates seen in the first four months of 2023.
Wrapping up the presentation, some suggestions to help the budget included: looking for grants and additional revenue sources (beyond sales taxes), considering sun-setting programs that no longer fit top priorities and closely scrutinizing any out-of-cycle funding requests (using a proposed new policy). Council then asked if a mill levy to help fund the debt service on the fire station would be possible. Deemed not a popular choice, (especially when residents expect fire protection to be baked into the regular budget), this would require voter approval.
Residents are reminded that they also can be part of the budget development process by contacting their council members to share their own priorities or suggest specific requests or trade-offs.
Treasurer Bergin summed up a takeaway message by saying: “Aimee put out a good case here – the sands are shifting this year for revenues and the economy continues in a period of uncertainty, with inflation and unknown events in the world. What we’re suggesting is, it can’t be ‘business as usual’ for next year’s budget.”