Colorado Springs Mayor Yemi Mobolade’s first draft budget for 2024 proposes some hiring freezes, decreases in spending across all departments and drawing on reserves as the city projects weak consumer spending into next year.

The draft budget of $901 million for all services plans for a one-time use of $10 million in reserves, as well as reductions to citywide expenditure items and a 3.4% reduction in operational spending for all city departments to cover the increased costs of providing services.

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At the same time, officials expect Colorado Springs’ general fund that pays for basic city services will rise 1.7%, or by $7.2 million, up to $428.3 million.

“Our city government is, just as everyone in our community is, being challenged by a variety of economic conditions and inflationary pressures,” city Chief Financial Officer Charae McDaniel said at a press conference Monday afternoon. Next year’s proposed budget accommodates for several “unavoidable cost increases,” like increased contract and insurance costs as well as salary increases to retain and attract key employees, she added.

Colorado Springs relies on its sales tax to finance just over half of its general fund budget, but sales tax revenues in 2023 have been weaker than expected; officials expect that trend to continue into 2024, they said Monday.

Sales tax revenues are flat compared to the 2023 budget and in some months have declined. For example, a Finance Department report released for August, the most recent month for which data is available, shows the city’s sales tax generated about $20.5 million that month, approximately a 0.4% decline from August 2022.

It’s the third time since May that sales tax collections have fallen on a year-over-year basis. Financial reports show sales tax collections were generally weak in late 2022 and during the first few months of 2023 – increasing by 1.4% or less – until May’s decline, when revenues fell 6.3%, the first for the city in the three-year, post COVID-19 pandemic period.

In 2024 the city anticipates sales and use tax revenues will total about $252.7 million, just 2.5% more than the 2023 end-of-year forecast of about $246.4 million.

The conservative budget does not include new employee positions except those needed to insource the city’s fleet maintenance operations or those fully offset by revenues, McDaniel said.

The draft document plans for spending about $2.2 million to in-source the city’s fleet maintenance operations, adding 43.5 full-time employees, 15.5 of which were added during 2023. The 2024 proposed budget amount includes the net cost of the previously budgeted contract amount and is partially offset from city enterprise revenues.

The city has also appropriated just over $1.2 million to add about 10 new staff positions total in the City Auditor’s Office, Public Works and Parks, Recreation and Cultural Services departments, positions that are 100% offset by revenues.

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The document proposes earmarking $8.7 million to fund salary increases for civilian employees as well as sworn police and firefighters to keep up with the market. All sworn police and firefighters, as well as positions at the 911 Communications Center, are expected to receive a 4% market increase in pay, the draft budget shows. Civilian employees who are below market averages for their positions will receive a pay progression on their job anniversary date, and civilian employees could see an average raise of 2% for performance.

Each city department will decide how it will decrease its operational spending by 3.4%, which could include hiring freezes, reducing or eliminating temporary staffing and overtime hours, and reducing non-critical operating expenses or eliminating non-critical capital expenses, McDaniel said. 

Citywide, the budget reflects reductions in the Capital Improvements Program that funds major transportation, facility, parks and IT infrastructure upgrades; reductions in funding for facilities-related capital projects while maintaining funding for critical projects to avoid falling further behind in facility maintenance; and temporarily slowing down the pace at which non-emergent fleet vehicles are replaced, McDaniel said.

Supplementing those reductions with a one-time use of $10 million in reserves will help align anticipated 2024 expenses with expected revenues, officials said.

The city also plans to continue into 2024 a property tax cap it put in place in 2022 and 2023 to counter property tax increases, expecting the credit to total about $8.7 million next year, McDaniel said.

As Colorado Springs and the country embrace for more economic headwinds, like ongoing inflation, the city plans to hold about 17% of its general fund in reserve to cover funding shortfalls, officials said.

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Other budget highlights include:

? An additional $250,000 for capital costs to add more school zones near middle and high schools, with the goal to increase pedestrian safety at all schools over the next several years. Officials expect the increased cost to be offset by increased fee revenues.

? $1.9 million of matched funding to leverage $15.4 million for critical infrastructure and transportation-related capital projects.

? An increase of $170,000 in funding to Mountain Metro Transit for increased contract costs to sustain transit services, and $180,000 in increased funding for security at the Downtown Transit Center.

The Colorado Springs City Council will review the budget proposal in the coming weeks. The board could make changes ahead of a final vote in late November.

On Oct. 23 the city will hold a public hearing on the proposed budget, 5:30-7 p.m. at City Hall, officials said Monday.

Review the document online at coloradosprings.gov/budget.