Durango appears to be heading toward two special elections: one as early as July 31 to modify the City Charter to allow all city voters to participate in a franchise election, which would then set up a November vote on a new franchise agreement or an occupational tax for La Plata Electric Association.
The November election would essentially be a do-over vote after voters in April rejected a 20-year franchise agreement for the local utility. Because the franchise agreement carried a 4.67 franchise fee, which LPEA passed on to consumers, the city currently has a $600,000 budget hole or a $20 million shortfall over 20 years.
Finances are so tight that the city expects to exhaust its payroll overtime budget by the end of the USA Pro Cycling Challenge in August. So if there’s a snowstorm before January, the city will have to overspend to clear the streets, City Manager Ron LeBlanc told the City Council during a study session Tuesday.
The city anticipates cutting new programs this year like a block grant to encourage business developments, a salary study, a volunteer coordinator and a private-public sidewalk project, in which costs of repairing residential sidewalks would be split with homeowners.
Durango was considering cutting $300,000 to its street-maintenance program this year until Mayor Doug Lyon suggested transferring $426,000 from a pending real-estate transaction with Vectra Bank to its general fund.
The proceeds from the sale of some city-owned land near Walmart was originally slated for capital improvements for the parking lot, ice rink and mountain bike trails at the Chapman Hill recreation center, but Lyon said the city could still fund these improvements with a half-cent sales tax dedicated for recreation.
City Councilor Paul Broderick then quipped that the mayor’s revenue-shifting sounded like “proper accounting to me,” but Broderick was skeptical about going before the voters to ask for a source of new revenue to patch a hole that represents about 3 percent of the city’s general fund.
Most people are accustom to making bigger cuts in their personal budgets, he argued.
“It doesn’t mean you don’t eat,” Broderick said. “You eat differently.”
Broderick then got into an exchange with LeBlanc about managing finances.
“Just because we’re government does not mean we’re incompetent,” LeBlanc said.
“Their perception is that you’re not running 100 percent efficiently,” Broderick said.
LeBlanc then asked Broderick what entity is 100 percent efficient.
When Broderick suggested outsourcing city services, LeBlanc said the outsourced services would not fix the city’s general fund because the outsourced services are currently funded by dedicated funds.
Because the city has cut 37 staff positions over the course of the “Great Recession,” there is little appetite to cut more employees or services, officials said.
City officials were encouraged by support from three public hearings for replacing the lost revenue from the defeat of the franchise agreement. LeBlanc noted that LPEA is currently the only utility not paying either a franchise fee or an occupational tax. LPEA is using the public right of way to maintain its infrastructure.
With voter approval, Durango could charge LPEA with either the franchise fee or an occupational tax, which LPEA would pass onto consumers on their electric bills. Consumers in Durango paid an average franchise fee of $6 per month when it was effect.
If it renewed the franchise, which would give LPEA a monopoly, the city would not have “to reinvent the wheel” because it could still impose the same negotiated agreement that voters had rejected in April, officials said.
If it seems risky to present the voters with the same agreement they have already rejected, an occupational tax has its risks, too.
The city would have to determine a set amount of money it would have to raise from the tax every year.
Under an occupational tax passed in 1992 for Atmos Energy, a supplier of natural gas, the city is locked in getting just $114,000 a year, LeBlanc said. Because of inflation, $114,000 does not go as far as it did in 1992.
As part of a referendum, the city could tell the voters it would revisit the tax amount in another five years, LeBlanc said.
The City Council would have decide later this summer which tax proposals to present to the voters in November.
The councilors want to modify the City Charter to allow all voters to vote in franchise elections. Currently, in these elections only property owners registered to vote in the city can cast ballots.