Some incorrect assumptions about growth in 2003 have put a
wrench in Castle Rock’s budget, said Castle Rock Town Manager Mark
Stevens.

“We don’t have enough money to cover contracts for parks this
year,” Stevens said. “There’s not enough money to fulfill the
contract on the Crowfoot Valley Fire Station.”

Castle Rock has two parks in the works: Paintbrush Park in The
Meadows and the skateboard park in the Metzler Community
Park.

The town will borrow from other funds to cover its commitments,
Stevens said June 16 during a presentation to the Castle Rock Town
Council.

“We budgeted for a small increase in sales-tax revenue for
2003,” Stevens said. “The good news is we are doing slightly better
than expected.”

The issue of the town’s reliance on sales tax has been discussed
several times by the council.

“We have said for a long time that reliance on sales tax is not
a good idea,” said Jay Richards, district 1 councilman.

The bad news is that when the town established its 2003 budget,
it made some assumptions that haven’t panned out.

“Motor vehicle taxes are down,” Stevens said. “We didn’t expect
or budget for this. It’s a fairly major deficit of about $400,000
less than budgeted, and we don’t know why.”

Castle Rock’s general budget is based on sales and use
taxes.

Another incorrect assumption was in building use taxes, Stevens
said.

For the 2003 budget, the town anticipated development activity
to produce 1,200 dwelling units this year and based its budget on
the expected proceeds from building permits and impact
fees.

“The trend is a little more than half of what we expected,”
Stevens said. “It looks like at the end of the year we’ll have
about 750 new dwelling units.”

So far this year, there have been 364 new dwelling started,
Stevens said.

“That represents about a 6 or 7 percent population increase,”
Stevens said.

Castle Rock experienced an average of nearly 10 percent
population increase each year in five years. The 6 percent increase
is closer to normal, Stevens said.

In all, the town could face between $4.7 million and $5.8
million in shortfalls.

The town also will face Taxpayers Bill of Rights issues in 2004,
said Karen Feeney, director of finance for the town.

In 1992, voters approved a state amendment that restricts the
amount of tax revenue a government can collect and retain. The
formula for determining the limit is figured using inflation and
growth. All revenue in excess of that amount must be returned to
taxpayers, unless voters approve an exemption.

Because the town is facing a lower amount of revenue this year,
the TABOR formula will have a lower ceiling in 2004, Feeney
said.

If the town should experience an upward trend in revenue, the
town likely will have to refund money to the taxpayers, Feeney
said.

As dismal as the forecast sounds, Stevens said the town is not
in a crisis.

“We have options,” Stevens said. “We are going to explore those
options. My main goal tonight was to give [the council] a clear
understanding of what’s going on.”