Budget officials caution that good news may not be long lived because economy is still uncertain

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AURORA | Thanks to an increase in car purchases by Aurora residents, city sales tax revenues are back to pre-recession levels, city budget officials said at an Aurora City Council meeting April 20.

That means the 2014 city budget could be balanced without any cuts and the city has an extra $7.4 million available for one-time expenses.

The city received $135 million from sales tax revenues in 2012, above the $126 million the city received in 2008, which was the city’s best sales tax revenue year before the economic recession hit and sales tax revenues took a steep fall.

The bump in sales tax revenues comes primarily from a growth in auto use taxes, which are the taxes that Aurora residents pay to the city whenever they purchase a car at any dealership in the state.

In 2012, the city received $12.7 million in auto use tax revenues, a 20-percent increase over 2011, said Jason Batchelor, the city’s finance director.

Auto use taxes continued to increase through the first quarter of 2013. They were up 5.5 percent over the first quarter of 2012, according to a budget presentation.

Batchelor said the increase might be because Aurora residents who needed a car but couldn’t afford one during the recession are buying cars now.

But he said he expects the growth in auto use taxes to taper off later this year and in 2015 and 2016.

“You don’t see that rapid growth sustained over a long period of time,” he said.

Batchelor said infrastructure technology companies were buying large servers and large computer installations last year, which also contributed to the city’s overall increase in sales tax revenue.

The city earned $1.5 million in 2012 from taxpayers in the IT industry, while it usually expects about $300,000 annually from that group, Batchelor said.

“That’s a sizeable increase. We aren’t sure if that was pent-up demand for things that during that recession hadn’t been done … but we see this as sort of an anomaly,” he said.

The increase in sales tax revenues means that the city might not have to make any cuts to balance the 2014 budget, which would be the first time in about a decade that the city wouldn’t need to reduce planned spending, Batchelor said.

Preliminary budget estimates in 2012 predicted that the city would need to cut about $3.5 million in 2014.

Extra sales tax revenue also means that the city has $7.4 million for one-time expenses.

City council members said at their April 20 meeting they’re considering spending the money on transportation projects related to the Regional Transportation District’s Interstate 225 FasTracks light rail line or other road and infrastructure projects. They’ll decide which projects to fund within the next six months, Aurora Mayor Steve Hogan said.

Projects related to the I-225 light rail line include: $2 million to brand RTD’s East Colfax Avenue light rail station bridge and make it more aesthetically appealing for visitors traveling to the Anschutz Medical Campus; $1.75 million for more decorative chain fencing instead of RTD’s standard chainlink fencing at light rail stations; $270,000 for public art at three light rail stations; and $200,000 for upgrades to lighting, signage, bike storage and walking paths at six light rail stations.

Hogan said at the meeting he’d rather not see all the extra taxes go toward light rail line
improvements.

“If we tie up $7.4 million we’ve got a whole host of other projects throughout the city that we’re not going to be able to address,” Hogan said.

Those include the infrastructure improvements throughout the city such as road widening, median improvements, new turn lanes and new sidewalks and bike paths.

Councilman Bob Broom said he’d like to see the city spend money on improving streets.

“We’ve been skimping on street maintenance for the last six years and the quality of our pavement has gone down,” he said. “When you put money into streets early, it’s a lot cheaper to maintain them.”

While council members are excited to have some extra cash this year, Batchelor is quick to caution that another economic downturn could be looming.

Economic downturns usually happen once every decade, he said, and the city still doesn’t know how it’ll be effected by federal sequestration cuts.

“It’s my job to remind everybody that the economy doesn’t just always go up, it does go down,” he said.

If Buckley Air Force base employees are forced to take furlough days because of sequestration cuts, that could have a negative impact on the city’s tax revenue. Some of military employee paychecks end up in Aurora’s general fund.

Over the next few months the city will focus on boosting its sales tax revenue even more by trying to attract big-name retailers to Aurora like Whole Foods. Marijuana sales taxes could help, too, if the city allows commercial marijuana retailers within its limits.

Overall, the city is in good financial shape, Batchelor said.

“We’re glad our sales tax revenues are doing well and the good financial position we find ourselves in, without raising taxes, is because of good management,” he said.

 

Reach reporter Sara Castellanos at 720-449-9036 or [email protected] 

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