Laserfiche WebLink
CITY OF MONTE VISTA, COLORADO <br /> MANAGEMENT'S DISCUSSION AND ANALYSIS <br /> IDecember 31, 2011 <br /> IEconomic Factors and Next Year's Budgets <br /> The Monte Vista economy continues to struggle. Sales tax revenue at both the city and county level is flat and has <br /> been for most of the past decade. Property taxes remain flat indicating little or no new growth and stable values. <br /> As sales and property tax are the leading revenue source for the General Fund the future trends are disconcerting <br /> when measured against service demands and the cost of doing business. The ability to provide services at the <br /> existing level of quality will be challenged within two years if the current financial trend continues. City reserves <br /> are adequate to meet short-term contingencies but remain below optimal levels and are not sustainable as defined <br /> by the Finance Director and City Manager. <br /> The cost of business continues to rise. Energy costs are expected to increase dramatically in 2012. Labor costs are <br /> stable though a higher than average employee turnover rate is expected, thereby driving up recruitment and <br /> training costs while lowering efficiencies. Increases in employee health care costs continue to erode the City's <br /> operational capability. The City recognizes the value of employees and continues to look at ways to make wages <br /> and benefits competitive. However, the current cost sharing formula for health care benefits will have to be <br /> adjusted if the upward cost trend continues. <br /> The 2012 budget is reflective of the concerns over the state of the current economy. However, there are unknown <br /> variables that will have a significant impact in the enterprise fund. State mandated water augmentation plan (est. <br /> up to $2,000,000 paid through long-term loans). Though the City restructured water and sewer rates in 2010 to <br /> reflect operating increases and to adjust to changing water use patterns,the long-term health of the enterprise fund <br /> may well require increases in rates to meet the financial burden placed upon the City by state unfunded mandates. <br /> The City's financial capacity continues to be below thresholds necessary to fund infrastructure and general <br /> improvement projects. The median family income in Monte Vista continues to be well below the state and federal <br /> "low income" thresholds; reducing the potential for local generation of capital to fund large bond issues. The <br /> 2010 census shows both the City and the county losing population while the median age of our citizens continues <br /> to rise. The City has been very successful in obtaining grants, but the total infrastructure costs far exceed normal <br /> grant maximums. Grant opportunities have also been greatly reduced as the state and federal governments cut <br /> budgets in order to reduce large deficits. It will be necessary for the City to develop increased public/private <br /> I partnerships as a means to overcome the loss of grant opportunities. More importantly, the City needs to <br /> aggressively pursue new business and industry in order to generate additional revenue streams to meet future <br /> operational and capital improvement requirements. <br /> In summary, the short and long term financial projections indicate the City must continue to be conservative in its <br /> spending patterns while working diligently to identify and pursue additional revenue sources. The City Council <br /> and staff have recognized the current economic trends and are preparing the City to meet the current challenges <br /> while continuing to plan for the future. <br /> Requests for Information <br /> This financial report is designed to provide a general overview of the City of Monte Vista's finances for all those <br /> with an interest in the government's finance. Questions concerning any of the information provided in this report <br /> or requests for additional information should be addressed to: <br /> ■ <br /> City of Monte Vista <br /> I Don Van Wormer, City Manager <br /> Debbie Phillips,Finance Director <br /> 4 Chico Camino, Monte Vista, Colorado 81144 <br /> 719-852-5926 <br /> I 14 <br />