The trend “creates the potential for hard decisions in the future,” said Ben Burkett, finance director for the city of Cortez.
The City Council is proposing general fund expenditures of about $12 million, with total operating expenditures of over $27 million for 2021. By comparison, the estimated general fund expenditures for 2020 were over $11 million, with total fund expenditures estimated at over $28 million.
This year, Cortez has a surplus of $230,000 in the general fund for city services and operating costs, not specific projects.
But the city faces a projected deficit of $412,000 in 2021 and $828,000 in 2022, as anticipated costs increase for city needs such as new police vehicles, Burkett said.
Proposed budgets can “vary depending on city priorities and the revenue available,” Burkett said Tuesday during a public meeting on the 2021 budget. The city can choose to spend money on projects to improve services to the community, which can contribute to a projected deficit.
And according to city code, Cortez needs to set aside at least 20% of its operating expenses, or $2.25 million.
The projection for 2020 was revised because of COVID-19, but Burkett said sales tax revenue has been higher than expected since the start of the pandemic.
The projected deficits for 2021 and 2022 were “based on a potential recession” with the economic fallout of the virus, Burkett said.
“If sales taxes come in above what we’re expecting, which is what is happening right now,” he said, Cortez’s budget might have a brighter future.
At the same time, revenue can’t keep up with operating costs. And money generated by the lease of the city’s hydroelectric plant to Empire Electric Association LLC is expected to drop as the two entities negotiate a new contract, which reflects the lower cost of renewable energy nationwide.
“It’s something for the council to be aware of and watch,” Burkett said.
The new finance director also said there were many mistakes in the records when he took on the role. It was formerly held by Katheryn Moss, who last week entered into a plea agreement for embezzlement of public city funds.
The city is accepting public comments on the proposed budget through Sept. 25.