The Crawford Town Council spent a lot of time considering best practices for municipal fiscal sustainability during its August work session.
Early this year the town agreed to participate in a three-year program through the Department of Local Affairs to improve fiscal stability through the implementation of "best practices" for budget and policy development. The process began with analyzing how the town is currently doing things, establishing a basic understanding of the town's financial picture, and talking with staff and elected officials about their goals. Kimberly Bullen, northwest regional manager for DOLA based in Grand Junction, was on hand to meet with the trustees. She was joined by Parker Crowe, DOLA budget program manager.
Crowe presented the results of the initial review of town budgets between 2009 and 2016. Through graphs, he explained the town's financial situation. He painted a picture of stability, from a population little changed over that period, to revenues and expenses that are fairly evenly matched.
Crowe showed that the assessed valuation of property in Crawford has held "pretty steady," although commercial valuation is dipping while residential valuation is about the same. This is a trend that over time could be worrisome because of the taxing ratio set by the Gallahger Amendment.
He noted the town has a "very healthy position" with its reserves at 250 to 300 percent of operation expenses.
Crowe observed the town's revenues and expenses have been "pretty well matched," with little need to dip into reserves. However, that appears to be changing over the past two budget cycles. He showed the trustees that 38 percent of the town's revenue comes from intergovernmental sources, 10 percent from miscellaneous sources, 27 percent through sales and use tax, and 18 percent from other taxing sources.
Over time, according to Crowe, the town's revenue is up slightly and expenses have gone down. The result is the healthy reserve balance.
After laying a foundation with the basic financial information, Crowe went on to discuss why the town needs financial policies. The budget is an annual process, he said, which the trustees are just beginning for 2019. Policy is longer term thinking, where the trustees set a strategic plan for finances, capital improvements and infrastrucure. "These things help the budget process," said Crowe, "because many decisions are already made."
He suggested the town begin with a reserve policy "because without reserves a municipality is pretty much 'screwed' if something major happens." He suggested staff refer to the GFOA.org website as a resource for best practices and draft policies.
Crowe explained that a good reserve policy will define the purpose of the reserve; target levels; a plan to get to the target level, conditions for use; establishing who has authority over the use of reserves; replenishment; what to do with excess reserves; and periodic review of the target levels.
Kimberly added, "What Parker demonstrated is you are doing pretty well in several areas ... we encourage you to pick a starting point [to improve the town's practices] and to stay focused on that until you actually adopt a policy. Finish it before moving forward on another policy. We have been working with your town clerk, Cally Gallegos, on a reserve policy." They have also started working with staff to develop a capital asset inventory.
Gallegos reinforced the message of focusing on one thing at a time, asking the trustees to decide if they wanted to work on a reserve policy or a capital improvement plan. "I can only work on one policy at a time," she said.
Trustee Chris Johnson said, "We don't know what our needs are, it has never been defined what the reserves are needed for ... we know of some projects such as a new water tank. It would help to have more information before setting reserve levels."
During the discussion, it was pointed out that the capital asset inventory, which when completed, will identify the components of the town's infrastructure and attempts to define the remaining useful life. This becomes a tool in establishing a capital improvement plan, which is also tied to the reserve policy to address future needs of the town.
Crowe explained how each component plays a role in the budget process. The capital asset inventory helps the trustees and staff understand short-, mid- and long-term capital spending needs. With this information they can then set a meaningful reserve policy that can be adapted to changing needs instead of hoping things work out.
Bullen pointed out, "Crawford is a disadvantaged community, which qualified you for grants, free and low interest loans ... these things can enable to town to replace aging infrastructure at a pretty reasonable rate."
Bullen suggested the town complete the asset inventory so the board knows what it has, the condition and projected life balance. "This provides a starting point so you can be knowledgeable in setting reserves," she noted.
Look for the Crawford Town Council to adopt a series of policies in the coming months, based on the guidance of DOLA.
On Tuesday, Sept. 11, the Delta County Board of Commissioners called a special meeting to consider the board's response to the Bureau of Land Management's preliminary Environmental Assessment (EA) concerning the lease parcels proposed for the December BLM sale.
Several people from the North Fork were present to provide input.