With the “de-Brucing” of property taxes in the November election, Denver is heading into its most stabilized budget in at least five years, but challenges remain to find efficiencies, catch up on deferred improvements and promote revenue growth.
The brighter fiscal outlook was presented by Brendan Hanlon, the city’s budget director, at Friday’s Buechner Breakfast First Friday. More than 120 people attended the panel discussion on “Denver’s Budget: Where We Are and Where We Are Headed.”
Other panelists were Susan Barnes-Gelt, a Denver Post columnist; Robyn Moore, first vice president of George K. Baum and Company; and Patrick Heck, chief financial officer of Denver International Airport. The session was moderated by Todd Ely, assistant professor, School of Public Affairs.
The series is coordinated by the School of Public Affairs’ Buechner Institute for Governance and takes place the first Friday of every month, tackling some of Colorado’s biggest policy matters.
Hanlon said the city is enjoying a bit of breathing room after reducing its budget each year during the Great Recession, solving $530 million in fiscal gaps during the past five years.
Because voters approved 2A, the “de-Brucing” measure on city property taxes, $44 million in revenue is now available to Denver to use toward restoring services and catching up on capital purchases, Hanlon said.
“Our budget is more stable than it has been. We’re observing some economic growth,” he said. “I’m cautiously optimistic that we’re moving toward a more robust recovery.”
He said two areas have been particularly neglected in Denver’s $1 billion general fund: replacing old fleet vehicles, especially in public services, and upgrading technological services. “I have $70 million worth of backlog that I need to catch up on in order to get us back to what would be a world-class city.”
Barnes-Gelt said she didn’t support 2A because she felt Denver didn’t follow a city budget task force recommendation to take more expense-reduction measures before opting for a “de-Brucing” vote. She said more expenses could be pared in personnel costs — particularly in pensions and benefits, which she called “extremely generous” — as well as through departmental efficiencies, which the city has just begun to look at through detailed audits.
Lastly, she said the recapturing of city property taxes will ultimately lead to a worsening of the imbalance, thanks to the Gallagher Amendment, between residential and commercial property taxes. The latter, she said, could potentially bear 98 percent of the property tax burden. “The goose that lays the golden egg is commercial property. So what we’re slaughtering the goose before we really see how we can address the expense side of the general fund, and we’ve done it permanently.”
Hanlon countered that efficiencies and city contributions to pension plans are being addressed. “The personnel expenditures are an issue, but I think we’ve been taking some meaningful steps,” he said. “We have more work to do, but I believe when you pair all these things together they are going to be creating a permanent solution.”
Heck explained DIA’s balance sheet, which receives 60 percent of its revenue from airline sources. Despite the bankruptcy of a couple key airline tenants in recent years, finances improved with the arrival of Southwest Airlines. “We came through the Great Recession relatively unscathed,” Heck said. “We saw our revenues continue to increase year over year.”
The airport remains a major economic engine for the region, Heck said, and development toward something like an airport city or aerotropolis will occur naturally over many decades. “I don’t think this is something that comes around in 10 years … But we have to be prepared for that to make sure we don’t strangle the golden goose.”
Barnes-Gelt said she is against current plans for an aerotropolis, saying city core issues such as inter-modal transit and infrastructure should be higher priorities.
An audience member asked how the city is planning for transportation needs among baby boomers. Hanlon said Denver is planning where and how to build bridges at future RTD transit stations as well as expanding the transit system to incorporate pedestrian and cyclist needs.
The next Buechner Breakfast will be Feb. 1 with the subject: “The Problem of Human Trafficking and Its Impact in Colorado.”
(Photo: From right, Brendan Hanlon, Denver budget director; Robyn Moore, first vice president, George K. Baum and Company; and Patrick Heck, chief financial officer of Denver International Airport, discuss Denver’s budget at the January Buechner Breakfast in the Terrace Room.)