tabor recession and recovery · 29.08.2017 · recession and recovery august 29, 2017 nicola sapp...
TRANSCRIPT
TABOR
Recession and Recovery August 29, 2017
Nicola Sapp
Chief Financial and Administrative Officer
EL PASO COUNTY
COLORADO
Presentation Overview
El Paso County Administration and Financial Services 2
• Remember the Great Recession
– National, Colorado Springs and El Paso County
• County deferred maintenance / layoffs
• Great Recovery
– Sales and property taxes
• TABOR cap formula implications
• Solution
• Next Steps
El Paso County Administration and Financial Services 3
Remember the Great Recession
4 El Paso County Administration and Financial Services
The Great Recession
February 2008 – February 2010 (R.I.P.?)
El Paso County Administration and Financial Services 5
Nationally
– 8.7 million jobs lost
– GDP contracted 5.1%
– Lehman Brothers – Chapter 11
– Washington Mutual – Chapter 11
– General Motors – government still owns 32%
– General Growth Properties – Chapter 11
– Charter Communications – Chapter 11
6 El Paso County Administration and Financial Services
The Great Recession
February 2008 – February 2010 (R.I.P.?)
El Paso County Administration and Financial Services 7
Colorado Springs
• Parks grass dies – parks restrooms locked
• Medians are overtaken by weeds
• Streetlights turned off
– Unemployment peaks at 9.6%
8
The Great Recession
February 2008 – February 2010 (R.I.P.?)
El Paso County Administration and Financial Services 9
El Paso County
– Cuts more than 200 positions
– Reduces parks hours
– Temporary Assistance to Needy Families, Food
Assistance, and Child and Senior Protection cases
skyrocket and case workers are spread far too
thinly
– Bi-annual assessment process fails to track
recovery
The Great Recession
February 2008 – February 2010 (R.I.P.?)
El Paso County Administration and Financial Services 10
El Paso County
• Property tax collections lag two years after recovery
begins
• Deferred maintenance catches up to County
Facilities
– Flu vaccines lost in HVAC failure at County Health
– Fire Department issues warning on over capacity DHS
Facilities
– County I.T. runs critical databases on obsolete VAX
systems
El Paso County Administration and Financial Services 11
The Great Recession
February 2008 – February 2010 (R.I.P.?)
El Paso County Administration and Financial Services 12
El Paso County • 14 year-old county plows and graders experience 50% failure rates in
snow storms of more than 1-day duration
• Deferred Road and Bridge backlog soars to $200 Million
The Great Recession
February 2008 – February 2010 (R.I.P.?)
El Paso County Administration and Financial Services 13
Overworked DHS Caseworkers miss warning calls
and mailed audio tape
2-year-old child dies in foster care
El Paso County Administration and Financial Services 14
Great Recovery
Great Recovery
Historical Sales Tax Collections
15 El Paso County Administration and Financial Services
$69M Prerecession $65M
Midrecession
$69M Takes 4 years to get back to prerecession
$96M Great Recovery - Economy Strong
$60
$65
$70
$75
$80
$85
$90
$95
$100
2007 2009 2011 2016
Sales Tax (in Millions)
Great Recovery
Historical Property Taxes and Values
16
$39M
$45M
$47M
$42M
$49M
$36
$38
$40
$42
$44
$46
$48
$50
2007 2009 2011 2012 2017
Property Tax (in Millions)
$46B
$54B
$57B $53B
$60B
$45
$47
$49
$51
$53
$55
$57
$59
$61
2007 2009 2011 2012 2017
Property Values (in Billions)
El Paso County Administration and Financial Services
Great Recovery
County Efforts
El Paso County Administration and Financial Services 17
– Able to address local share of Four Nationally
Declared Disasters in Four Years
– Strategic Moves Initiative significantly addresses
failing building infrastructure
– Dedicated Public Safety tax addresses significant
deficits in Public Safety
– Able to start addressing critical operational and
capital backlogs
– Five Year Financial Roadmap illustrates County finally
heading in right direction after over a decade of
financial challenges (only roads left unfunded)
El Paso County Administration and Financial Services 18
TABOR Cap Implications
TABOR Cap Implications
El Paso County Administration and Financial Services 19
– TABOR allows a significant reduction during bad
economic times, does not allow for a strong
recovery
YEAR 1 - Employed
Earn $50,000
YEAR 2 – Lose Job/ Pick up Part-Time
Work Earn $10,000
YEAR 3- Get New job
Earn $50,000 Can Only Keep
$11,500 0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
TABOR Cap Implications
El Paso County Administration and Financial Services 20
CURRENT SITUATION
TABOR CROSSROADS
WITH TABOR RESET -
* ADDRESS COUNTY CRITICAL NEEDS
*INVEST TENS OF MILLIONS IN FAILING
INFRASTRUCTURE
WITHOUT TABOR RESET -
*NOT ADDRESSING COUNTY CRITICAL NEEDS
*NOT INVESTING IN FAILING INFRASTRUCTURE
*BUDGET CUTS OF TENS OF MILLLIONS
*DEVASTATING TO COUNTY
TABOR Cap Implications Revenue Base Comparisons
El Paso County Administration and Financial Services 21
$0
$50
$100
$150
$200
$250
$300
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Est
2018 Est
2019 Est
2020 Est
2021 Est
2022 Est
Mill
ions
CPI New Construction Original TABOR Base Reduced TABOR Base Ballot Effect
$8
.8M
Re
fun
d C
ove
red
with
1.0
91
Mill
Re
du
ctio
n &
Elim
ina
te B
PP
T
$2.0
M T
abo
r R
efu
nd
$15
.2M
Re
fund
$16
.6M
Re
fund
or
Zero
$15
.5M
Re
fund
or
Zero
$6
.8M
Re
fun
d o
r Z
ero
Eco
no
mic
Do
wn
turn
Reve
nu
e
De
cre
ase
$2.3
M
Sta
rt o
f G
reat R
ecessio
n
De
cre
ase
Mill
.5
18
due
to
5.5
% L
imit
Ne
ga
tive
CP
I G
row
th
De
cre
ase
Mill
.3
39
due
to 5
.5%
Lim
it
Formula Implications Annual TABOR Revenues Collections Versus Cap
El Paso County Administration and Financial Services 22
($5)
$0
$5
$10
$15
$20
$25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Mill
ions
CPI New Construction Actual Revenue Tabor Capped Revenue
Formula Implications Comparison of CPI versus El Paso County Sales Tax
El Paso County Administration and Financial Services 23
2.74%
8.46%
4.68%
5.38%
6.56%
8.57%
-0.65%
1.87%
3.69%
2.71% 2.77%
1.18%
2011 2012 2013 2014 2015 2016
Sales Tax Growth CPI
El Paso County Administration and Financial Services 24
Solution to this Unique Situation
Solution – Reset the Revenue Base
El Paso County Administration and Financial Services 25
• “Without imposing new taxes or raising tax
rates…”
• $14.5M – 2016 revenue retention – $12M – I-25 Gap local share and other roadway safety projects
– $ 1M – remaining disaster recovery projects
– $ 1.5M – parks, trails, and open space
– Resets revenue base to 2017 actual
– Retains TABOR limitations (not De-TABORing)
Solution
Draft Ballot Language
El Paso County Administration and Financial Services 26
WITHOUT IMPOSING NEW TAXES OR RAISING TAX RATES, SHALL EL
PASO COUNTY BE PERMITTED TO RETAIN AND SPEND $14,548,000 IN
EXCESS 2016 REVENUE AS A VOTER-APPROVED REVENUE CHANGE
PURSUANT TO TABOR (ARTICLE X, SECTION 20 OF THE COLORADO
CONSTITUTION) TO INVEST ONLY IN THE FOLLOWING INFRASTRUCTURE:
THE I-25 CORRIDOR GAP LOCAL SHARE AND OTHER ROADWAY
SAFETY AND IMPROVEMENT PROJECTS, UP TO $12 MILLION;
DISASTER RECOVERY PROJECTS; AND
PARKS, TRAILS AND OPEN SPACE PROJECTS,
WITH THE UNDERSTANDING THAT SUCH EXCESS REVENUE WOULD
OTHERWISE BE REFUNDED ONLY TO TAXABLE REAL PROPERTY
OWNERS AS A ONE-TIME TAX CREDIT (EXAMPLE: APPROXIMATELY $40
FOR A TYPICAL SINGLE-FAMILY HOME VALUED AT $250,000), AND TO
RETAIN AND SPEND IN THE 2017 FISCAL YEAR AND THEREAFTER AN
AMOUNT OF REVENUE THAT EXCEEDS CURRENT TABOR LIMITATIONS
BUT IS NO GREATER THAN THE COUNTY REVENUE CAP, WHICH
CONTINUES TO LIMIT FUTURE REVENUE GROWTH AS PROVIDED IN
RESOLUTION NO. 17 - ___?
Next Steps
El Paso County Administration and Financial Services 27
– September 5th
• Second Public Hearing on Ballot Question
• BoCC to Take Vote to Put on the Ballot
– 2018 Budget Process
• Two 2018 Budgets Prepared
• September 21st - Preliminary Balanced Budgets
• October – Original Adopted Budget Hearings
• November 7th – Election Day
• November 16th – Adopt 2018 Budget