There likely will be a philosophical shift in the way Castle
Rock budgets, beginning with 2003, said Mark Stevens, Castle Rock
town manager, at a special session of the town council
Monday.
“I have often pointed out the troubling reliance of the general
fund upon the 2 percent building use tax,” Stevens said. “I could
not, in good conscience, submit another budget based on sales and
use tax.”
The general fund pays for police, fire, park and other services,
Stevens said.
Historically, Castle Rock’s general fund has relied mostly on
sales taxes and building use taxes for its revenue. This year, with
a softer economy, the town has faced declining revenues.
Because of that shortfall the town had to borrow money from the
transportation fund reserve and dip into its capital reserves for
$1 million to balance the 2002 budget.
“The general fund situation is simply an unwise and dangerous
financial model,” Stevens said. “I do not want to submit a proposed
budget that perpetuates this practice.”
A proposed new model would treat sales tax and motor vehicle use
tax as recurring annual revenues and building use tax as a more
variable revenue, Stevens said.
Under the new model, instead of allocating 2 percent of the
sales, vehicle and building taxes collected to the general fund,
2.55 percent of the sales and vehicle taxes would be allocated for
the general fund and 3.75 percent of the building use tax would go
to the transportation fund, said Jeff Hansen, finance director for
the town.
The town also might want to consider collecting sales and use
taxes itself, instead of relying on the state, Stevens and Hansen
said.
Among the advantages of self-collection are increased interest
on revenue, better and more timely data, local audit capability and
local efforts to work on compliance and education with local
businesses, Hansen said.
In the next 10 days, the proposed budget will be completed in a
little more than a week and distributed to the council, Stevens
said. A budget update discussion with the council is slated for
Nov. 18, and the first reading of the budget will be Nov.
25.