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Pain in Public Policy 101

After a year of 'no high points,' city manager braces for 2009



Penny Culbreth-Graft says the first time she saw Colorado Springs, she knew she wanted to live here.

But she sure picked a hell of a time to move.

In her first year as city manager, Culbreth-Graft cut about $9.5 million from the 2008 city budget at mid-year; sliced $23 million from the 2009 budget; and laid off scores of city employees. This month, she's looking for ways to patch an additional 2009 budget shortfall. The gaping hole left by unenthusiastic holiday shoppers is rumored to be $12 to $13 million.

Meanwhile, the city is endangering one of its few victories of 2008: the retention of the United States Olympic Committee. Colorado Springs is late coughing up the millions it pledged to the project, because it hasn't issued the certificates of participation needed to finance it. Culbreth-Graft says the city will fix the problem as soon as the municipal bond market comes out of deep freeze.

So, this has been Culbreth-Graft's red-carpet welcome to our perpetually budget-strapped city, to our Taxpayer's Bill of Rights-ruled state, and to the global financial crisis.

"There were no high points," the California transplant says in an hour-long, sit-down interview just days before her one-year anniversary as city manager. "I've been in this business 32 years, and I've never experienced the kind of loss in terms of service, in terms of people and momentum, that I have seen [this year] ... I came into this business to provide service, and I came into this business to give to a community. And I've found myself, in my first year here, doing nothing but taking away."

Edge of the knife

So far, 2009 doesn't look prettier.

Culbreth-Graft already is putting together a list of possible further cuts and new revenue sources for Council to consider, probably later this month. There will be options for scaling back in police and fire, which were spared in the 2009 budget season.

Managing the budget is akin to predicting the future. If sales tax collections dip later in the year, and Culbreth-Graft hasn't already trimmed the budget, it could take months to implement changes on the fly. At year's end, she could wind up facing a huge shortfall and few ways to mend it.

However, if she cuts too deeply, she'll pay for it when the city emerges from the recession, because reimplementing services would be slow, dragging down economic progress, especially in the area of development.

So far, local businessman and former councilor Bill Guman says Culbreth-Graft has ridden the line with considerable skill.

"Perhaps what struck me most was her willingness to make deep cuts while ensuring basic services would be maintained," Guman writes in an e-mail. "From my past experience of having gone through eight annual city budget cycles, there are 'sacred cows' that the city manager just does not touch, even when City Council questions those expenditures. I applaud Culbreth-Graft for making tough decisions to eliminate certain high-ranking staff positions and recommending unprecedented across-the-board reductions in all city departments (except public safety)."

But the city manager may be changing her style for a while. With economic improvement predicted for early 2010, she's thinking of doing something she'd rather not: using one-time revenues to help fund ongoing expenses until the middle of next year.

That might not please everyone. Longtime councilor Randy Purvis says he's been pleased with Culbreth-Graft's performance, but adds, "The task in the next year is going to be working on getting a stable budget and a stable income for the city."

Option B

Culbreth-Graft faces a number of imposing challenges as she looks ahead to her second year. Toward the top of the list is making the most of the volatile sales tax, and the city's dependence on it.

Property tax, a much more stable form of revenue, mostly goes to school districts in Colorado Springs. For instance, the owner of a $267,000 home in School District 11 that is not in a special taxing district would pay just $105 a year to the city. In contrast, the homeowner would pay District 11 $936 a year.

"Even if the economy recovers, the whole idea of a sales tax is that you are a goods-producing economy, and the U.S. has not been a primary goods-producing economy for a very long time," Culbreth-Graft says. "So, what we've done is tie our primary source of income for our [city] services to goods, when we're a service economy."

It doesn't help that once the city emerges from the recession, the uptick in economic vitality will cause TABOR to clench down on property tax rates. While there's no slaying the state's TABOR monster, Culbreth-Graft says local voters could consider repealing the city's special TABOR requirements. (That opportunity might be on the city ballot in April.) Among other things, taking that step might allow the Colorado Springs airport to take full advantage of federal grants.

"What [city TABOR] means is, we have to say, 'Federal government, no thank you, we can't take your money,'" Culbreth-Graft says. "And if we're going to try to bring new airlines here, which is a huge economic boost ... we don't have the capacity to incentivize and to do the projects needed to get the companies here. So, what we do is, we forgo the opportunity to do something that doesn't cost our taxpayers a dime directly."

Waiting it out

For now, the city manager says she's trying to work with what she has. She says if there's any good news in an economic crisis, it's that it forces staff to think differently.

She points to Fire Chief Steve Cox. In his time as interim assistant city manager, she says, Cox created a more efficient system for working with developers on projects. Now, Cox is applying the same rationale to streamlining fire permitting.

For her part, Culbreth-Graft has given more leeway to workers wanting to tackle projects outside their job descriptions. When the city hadn't made progress on implementing form-based code for downtown over a two-year period, she turned over the task to senior planner Ryan Tefertiller. It wasn't the type of project Tefertiller would normally handle, but with the help of another colleague, he had it done in 60 days.

Vice Mayor Larry Small says he wants to see more of that kind of creative thinking. So far, though, he's impressed with the city manager.

"She's done a great job," he says. "I don't think she realized how tough it was going to be when she came in, and I don't think we realized."

Once the economy starts moving again, Small says, he hopes the city manager can turn her attention to something other than the budget, like reforming city policies and practices. Or investing more energy in economic development.

Culbreth-Graft seems ready for that time, too. She says she wants to encourage entrepreneurs, attract big business, expand the University of Colorado at Colorado Springs and encourage development in the city.

"I really want to create this understanding in the community that this is not an end time," she says. "This is only a beginning. And this is the beginning that we create as a community."

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