Economic Downturn Prompts City of Colorado Springs to Take a Little Bit of Action

The City of Colorado Springs Chief Financial Officer Charae McDaniel appeared before City Council for the June 26th Work Session to give a financial update for the 1st quarter of 2023, and to issue a warning about some grim numbers she’s seeing from May. 

It seems like only yesterday that McDaniel was communicating with other city employees, asking them to “show her the money” following her pursuit of on-line sales tax dollars. Her nickname “Cha-Ching” is well deserved. 

Times have changed and the money is no longer pouring into city coffers like it once was. Sales tax activity in the City through March was up 0.46%. That’s flat growth. Her warning came with the May sales tax collections, which were down 6.6% from May 2022. She anticipates June’s sales tax collections will be flat. 

Through March 2023, there were 5 negative growth categories for sales tax collections. Collected sales taxes provide 60% of the city’s budget revenue. 

Negative Growth for the 1st quarter:

Building Materials           -11.3%
Medical Marijuana-13.5%

Positive growth for the 1st quarter:

Auto Dealers+9.3%
Auto Repair+8.8%
Business Services+4.6%
Misc. Retail (mostly on-line shopping)+8.8%

McDaniel pointed out to City Council that through 2022, there was never more than one of these categories that was negative at a time. There is a leveling off and decline in sales tax revenue at this time.

McDaniel said the city has taken a “little bit of action”, but they aren’t panicking at this point. They are reducing their spending rate by implementing a 3-month hiring delay. They haven’t frozen hiring, but when a position is vacated, they are waiting 3 months before posting the position as an available job. Sworn positions, IT Help Desk, park workers, critical repair workers, and emergency call centers have been excluded from the hiring delay. 

Additionally, they’ve asked departments to slow their operating expenses. McDaniel said the benefit to delaying filling positions is that the city will be spending less in salary and benefit expenditures. It’s not expected that the City of Colorado Springs will meet anticipated sales tax budget projections for 2023. 

The City of Colorado Springs is preparing its 2024 budget right now. McDaniel anticipates that the best-case scenario is that 2023 sales tax revenue will remain flat, and that the city will have to make some difficult strategic decisions. 

McDaniel then changed the topic to compensation for city employees. She said the low unemployment rate means the City of Colorado Springs will need competitive wages in a hot labor market. In order to retain city employees and recruit for positions, she said the city will need to address compensation. She warned city council members that it’s “not going to be inexpensive.” She shared that insurance and benefits costs have been increasing, too. She promised a balanced budget for 2024. It does appear that Mayor Mobolade will be pursuing a November TABOR retention ballot issue to train and retain police officers. Those excess funds are from the 2022 budget. Mobalade recently awarded raises to multiple department heads and has expanded city government by adding a Housing and Community Vitality department.

Watch the full council presentation here at 1:25:40.

Our Comments

We wonder if cuts to the city budget mean our streetlights will be turned off and our park bathrooms will be closed, as happened during the last recession. Let’s hope not. Maybe it will simply mean they won’t be able to afford $300,000 fancy self-cleaning bathrooms like the ones they installed in Old Colorado City.

We’d like to remind our readers that in October 2021, we reported that city employees receive wages that are 30% higher than the citizens they are supposed to serve. Are we supposed to be clutching our pearls that those folks may not see big wage increases next year? We’re flat out of sympathy for the bureaucrats who steam roll over so many of our citizens, as neighborhood after neighborhood is told they just don’t matter.

It’s time to cut government spending drastically, while preserving critical services that are most important to the majority of citizens. We’re all cutting household spending and prioritizing spending. Government should be no different. 

Put some polite pressure on City Council members and Mayor Mobolade. It’s time they make some tough decisions. It’s irresponsible to increase government spending during an economic downturn. We’re all in this together, after all.

Mayor Yemi Mobolade

Colorado Springs City Council   

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