Thoughts on current and future Town of Lyons budgets

The most recent comprehensive study of Lyons’ current and future fiscal health was the Lyons Primary Planning Area (LPPA) study done by Ricker, Cunningham consultants in 2016-2017 and adopted by the Planning & Community Development Commission (PCDC) and Board of Trustees (BOT). Its conclusion: the Town of Lyons, which is nearing buildout, will eventually be in a fiscal deficit if it does not find ways to boost its revenues. To maintain a customary level of services to residents will take more revenue than the Town will be able to generate from existing taxes and fees after buildout of its current area.

Possible Ways to Avoid Deficits

1. Develop the Eastern Corridor (EC) to increase tax revenue. The LPPA study concluded that only EC development could generate a net positive return. Development of Apple Valley or the South St. Vrain area would only make deficits worse, because residential development in those areas would not pay for itself. The real money comes from commercial development, and neither of those areas is well-suited for commercial development. EC development is the focus of Lyons’ Urban Renewal Authority (URA) efforts at the moment, but several factors suggest net tax revenue from the area will be limited, even if it is achieved:

• The death of brick and mortar retail is a well-documented national phenomenon, as more sales of goods and services move online. The general idea (as reflected in the 2010 Comprehensive Plan) that retail development in the EC would produce big sales tax revenue for the Town seems dated and unrealistic. Light industrial, office, and residential development in the EC may be beneficial in a number of respects, but won’t produce large sales tax revenue for the Town.

• Whatever type of development may occur in the EC area, the Town will get little or no property tax from that development anyway, since property tax increments would remain with the URA to pay for EC infrastructure.

• The URA’s ability to assist with infrastructure to support EC development will be limited by the extent to which the URA must share property tax revenue with other jurisdictions (such as the school district, county, fire district, and library district) under new Colorado URA laws that give those districts the ability to negotiate less than 100% revenue sharing. The school district and library district have already negotiated to retain 50% or more of their tax increment revenue. The fire district wants to keep even more. The county’s share remains to be negotiated. In sum, the idea that tax revenue from the EC is going to magically save the Town from projected fiscal deficits is probably a stretch. Putting all the Town’s eggs in that basket would be risky.

2. Raise taxes and fees. Raising property or sales taxes would require voter approval. Lyons sales taxes were raised in 2016 and are only slightly below other Boulder County municipalities. Property taxes have risen rapidly due to rising property values, and voter approval of other significant tax increases is unlikely. Water and sewer rates are already being raised, just to keep utility fund balances above break-even. Tap fees (the one-time fees charged for a home to be connected into the municipal water system) are already extremely high, crimping new development. In sum, the ability to raise taxes and fees is quite limited.

3. Cut services. Lyons already “passes through” water and electricity supplies from the City of Longmont and a Nebraska-based electric co-op (Municipal Energy Agency of Nebraska). Lyons’ troubled sewer plant and sewer system are in need of major capital expenditures, requiring steep rate hikes. Lyons’ streets are generally in poor shape, other than those redone with flood grant money. There is no plan for major capital expenditures for streets, and no currently available source of funds for such a plan. All Lyons has been able to do in recent years is patch and seal as limited funds have allowed. Law enforcement service is contracted out to the Boulder County Sheriff’s Office. Engineering services and electric system repairs are contracted out. Lyons’ trash service is done by private haulers, not the Town. Library service is now provided by an independent district, not the Town. Most social services are handled by the nonprofit Lyons Emergency Assistance Fund (LEAF), to which the Town contributes, or by Boulder County. Lyons has few services to cut.

This is not just a theoretical problem: Lyons already lacks the money to pay for badly-needed water- and sewer-system repairs (we have deteriorating, leaking pipes in multiple locations), to make repairs and upgrades to the waste water treatment plant (necessary to get State permits to serve any EC development), and keep the streets in decent shape, much less improve them. The looming fiscal deficit is very real. Right now, we can’t pay for things we badly need to do. And that’s without regard to the gorilla in the room: possible “clawbacks” from flood recovery projects for expenses that the Federal Emergency Management Agency (FEMA) or the Department of Housing and Urban Development (HUD) may decline to finally approve.

4. Trim the budget. If Lyons’ projected fiscal deficit can’t be solved by new tax revenue from the EC, raising taxes and fees, or cutting services, that leaves trimming current budget expenses as the primary way to avoid fiscal trouble.

What Budget Expenses Could Be Trimmed?

1. Cut staff. You see it suggested over and over: “The Town staff has grown too big. We used to get by with three (or five, or nine, or 11) people. We’ve added too many. Town government has gotten too big.”

Such statements are over-simplistic. They often reflect a lack of knowledge that current Town staff still includes a number of flood-recovery, grant-funded positions that will eventually go away. Total staff on a full-time employee (FTE) basis, excluding flood recovery positions, is about 17. That isn’t a huge number for a small town that has grown–in population, amenities and tax revenues–since the days when volunteer Town board members would also run the electric department, take care of the parks and streets, and other such tasks.  Going back to how things were done 40 or 50 years ago isn’t realistic.

Nonetheless, there is a grain of truth, or at least an area for inquiry, in the “staff is too big” sentiments. Is every town position essential to providing basic, essential services (utilities, streets, public safety)?

The Town’s biggest budget expense category is personnel. If significant budget cuts need to be made, that’s the place to look. It’s not easy to cut a position that provides very real benefits to the Town, its residents, or local businesses. But are all of the positions essential for basic services?

The Town must have a Town Administrator–a “CEO.” The Town also must have a Finance Director, since its budget has gotten much larger and more complex, particularly with the incredibly difficult task of accounting for flood grants and expenditures. The Town takes pride in its parks, and Lyons voters have repeatedly shown strong support for parks, including dedicating nearly a third of the Town’s 3.5% sales tax to them. Rebuilt parks after the flood require a Parks Director and maintenance workers to operate and maintain them. A Public Works Director is also necessary, as are field workers, to deal with day-to-day streets, utilities, and Town property maintenance and repair. The Town Clerk, a legally required position, maintains vital town records and takes care of scheduling and recording board and commission meetings. A utility clerk is necessary to bill and collect for water, sewer, and electric service. Someone has to answer phones and greet visitors at Town Hall. Compliance issues with Town ordinances had gotten critical before a compliance officer was hired. A Planning Director was hired to cut the expense of contracting out that service, and the Planning Director is overworked.

In short, there is a core of essential Town positions that must be funded. But what else do we have? Reluctantly, and with full awareness of some likely blowback, I’d point to two positions for review as to whether they are essential:

Main Street Manager This liaison between Town and the business community, while beneficial, replaced in recent years what had been voluntary coordination between the Town’s Economic Vitality Commission and the Lyons Area Chamber of Commerce. Though not ideal, the prior system could be reinstated.

Sustainability Coordinator (SC) Still a half-time position, this position was initially funded by Boulder County grants. It is now Town-funded. The SC’s have done a good job, exploring ways for the Town government itself to become more environmentally conscious (recycling in municipal buildings and parks), monitoring and improving the Recycle Center, organizing the popular annual Town Cleanup Day and other special projects, and studying (at the direction of the BOT) alternatives for trash service, including a Pay As You Throw (PAYT) program. If PAYT is adopted, the SC will be absolutely necessary to coordinate with the selected hauler to implement the program. If it is not, and Lyons trash service continues to be done by private sector haulers, whether the SC is an essential Town position ought to be re-evaluated.

2. Eco-Pass Program. Even with what are probably overly optimistic revenue projections (sales of passes are projected to be higher in 2020 than 2019), the Town now projects to spend $14,000 to support this program. Changes in RTD fares will make the program even more expensive in future years. There isn’t good data on who uses the passes and how often. Is this an essential Town service?

3. URA support. Through 2020, Town financial support for the URA is projected to be $129,000. It may be more, as professional fee estimates for prior years have been low. The total doesn’t include in-kind contributions of many hours of Town staff time for URA meetings and studies. How much is the Town willing to invest in (or gamble on?) the URA without an identified way to get that money repaid or confidence that future sales tax receipts will recoup the investment?

4. Beware of add-ons, particularly those following after flood grants. Here’s an example: Flood grants paid for restoration of the ponds near McConnell Bridge. But the new ponds quickly developed an algae problem. Studies were done, and minnows and sterile carp were purchased and added. A $27,000 aerator has been proposed to be added, and will have to be maintained if approved. Landscaping will require maintenance after the warranty period ends. While the ponds are a welcome feature that beautifies Lyons, are they essential, like paved streets, non-leaking water and sewer lines, or police service?

Similarly, park features are expensive to maintain. Ballfield amenities, paved walking paths, playground equipment, and so on cost money. Which are nice to have, and which are essential? That question needs to be asked, over and over, for each budget year.

Now being studied is whether to acquire from Boulder County buyout properties along Highway 36 north of Lyons. Although no immediate use has been identified for those properties, there are possible future uses. Maybe river access for tubers, or pocket parks, or “toeholds” for future annexations of parts of Apple Valley. What maintenance and insurance costs will be incurred for such properties? What essential use will they provide to Town residents or businesses? Can they be expected to generate any revenue? Since the Town is doing nothing with current surplus properties (such as the old Apple Valley treatment plant and the triangle-shaped lot across from fire station, among others), is it wise to be adding more surplus property to the Town’s inventory?

Starting The Discussion

These are off-the-top-my-head thoughts from a fiscally conservative Town board member. They may well anger or disappoint some, and they may not reflect the views of a majority of the Town Board, or a majority of Town voters. They are just my attempt to highlight a serious problem Lyons faces: current and future fiscal deficits in trying to provide basic, essential Town services. I am certain that the problem exists; I am not certain that the things discussed above are the only ways, or the best ways, to address that problem. But I think it’s incumbent on everyone to come up with some viable ways to deal with the “fiscal deficit” problem. It’s not going to go away.

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Disclaimer: The views and opinions expressed in this Opinion Column are those of the author and do not necessarily reflect the official policy or position of any staff member, contribution writer or the Lyons Recorder.

NOTE: This article was published in January 2020.