Ermasova (2014) Budget Priorities of Colorado Springs during Economic Decline Dr. Natalia Ermasova PhD of Economics, PhD of Public Affairs Assistant Professor DIVISION MMPA, COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION GOVERNORS STATE UNIVERSITY room C3340, 1 University Park, University Park, IL 60484 Home address: 2830 Chayes Park Dr. apt.C Homewood, IL, 60430 Tel.: 1 (812) 369-6155 cell phone E-mail: ermasova@gmail.com nermasova@govst.edu Ermasova (2014) COLORADO SPRINGS CASE BACKGROUND In late 2009 the city officials of Colorado Springs realized they faced a $28 million budget shortfall. To avoid substantial service impacts the officials sought to pass a property tax increase during the November elections. The following information describes the area, the proposed tax measure, and the subsequent choices made by the City Manager, Mayor, and City Council. In order to better understand the events, it may be helpful to know a bit about city and its citizens: State of Colorado 2006 Registered Voters: 942,025 D (30.4%); 1,118,597 R (36.1%); 1,037,239 unaffiliated and minor parties (33.5%). Colorado Springs is the 2nd largest city in the state and the 46th largest in the US, by population, with 415,000 residents as of 2009. With a territory of 185 square miles it is the largest city in Colorado by area. The city sits at the base of Pikes Peak, and is home to the US Air Force Academy. Also nearby are Fort Carson and the Cheyenne Mountain Complex. The city is also home to many conservative evangelical organizations and is the headquarters of Focus on the Family. The diverse economy is dominated by the defense industry, high-tech business, and tourism. As of 2006 the state was in the top five for economic development and venture capital. Citizens of Colorado are at home in the outdoors and boast the lowest obesity percentage in the nation. Ermasova (2014) Summary of case Without passage of the mill levy, the city will be required to cut programs and services that should not be touched. These cuts would directly impact the current quality of life in our city; would detrimentally impact services that keep us all safe; and would make it very difficult for us to grow out of the current economic malaise. Over the past five fiscal years the combined per capita property and sales tax burden has declined approximately 7 percent when adjusted for inflation and population growth. The decline will be worse in 2009 and there is little evidence that it will improve significantly in 2010. The primary source of revenue for the General Fund is sales and use tax. This revenue source has been declining since 2007, and the 2010 sales and use tax forecast is nearly $22 million below 2007 actual collections. We forecast that sales and use tax collections will continue to decline, with the rate of decline slowing over the year, increasing to positive year-over-year collections by fall. Overall, the forecast assumes sales and use tax revenue will be 1.8 percent below 2009. Even before currently proposed cuts, public safety expenditures have declined 3 percent on an adjusted basis. Cultural and recreation expenses along with expenses for urban redevelopment and housing and economic development have also taken significant cuts. These cuts will be dramatically more severe next year unless we all join together and pass the mill levy. The following provides a brief summary of the proposed cuts in 2010 Budget: • Eliminate all General Fund portion of funding for transit routes • Fund only the first quarter of 2010 for four community centers (Hillside, Meadows, West, Deerfield Hills) and two of the seven swimming pools (Aquatics and Fitness Center, Cottonwood Creek Recreation Center) in an attempt to establish external funding sources for the remainder of 2010 and beyond. Close the remaining recreation and cultural facilities and provide minimum maintenance to preserve park infrastructure • Eliminate 14 uniform positions in the Fire Department • Eliminate 31 uniform positions and 11 civilian positions in the Police Department • Reduce funding for the City Auditor, Municipal Court and City Attorney • Reduce the General Fund portion of funding for storm water activities • Eliminate project management for PPRTA projects • Reduce traffic flow studies Ermasova (2014) • Eliminate the City’s Land Use public information counter, reduce zoning inspections, reduce neighborhood issue intervention/resolution • Reduce economic development programs • Eliminate strategic planning monitoring and reporting • Eliminate long-range Land Use Planning and annexation policy review projects • Eliminate maintenance of alleys and unpaved streets. These reductions result in 2010 General Fund net savings of $24.4 million and eliminate 197.75 positions. The all funds balanced budget totals $385,005,595. This total includes a blanket appropriation for expected grant funds of $63.2 million ($28.2 million more than for 2009 due to anticipated federal stimulus grants). Comparing the original 2009 budget to the 2010 budget exclusive of the grant funds reflects a 9.98 percent decrease from the original 2009 budget. The General Fund budget, which provides for the majority of public services to community, totals $212,236,374, which is an 11.01 percent decrease from the original 2009 budget, and a 7.05 percent decrease from the amended 2009 budget. As economic downturns reduce household incomes and lower investors' and consumers' confidence in the economy, local governments face especially troubling times. High unemployment and a drop in retail sales result in lower corporate, sales, and income tax revenues. Colorado Spring had taken standard measures to cope with lower tax collections, cutting hundreds of vacant positions, encouraging early retirements, stopping collecting trash in its parks, canceling city buses on weekends and at night, and reducing parks maintenance. According to articles in Wall Street Journal (13 Apr. 2010) and the Gazette ( October 15, 2013), Colorado Spring has turned off a third of its 24,512 street lights. Citizens sent the emails to the town council with following suggestions: (1) close community centers; (2) reduction of the police department; (3) sell the city-owned utility; (4) sell the municipal hospital; and (5) decrease the salaries and benefits of city employees. Colorado Spring is trying to get volunteers and the private sector to provide services the city can no longer afford. First, taxi drivers have been recruited to serve as a second set of eyes for stretched police patrols. Second, residents can pay $100 a year to adopt a street light. Third, the volunteers are organizing to empty the garbage cans in 128 neighborhood parks. Fourth, the city is asking private swimming programs to operate its pools. Finally, one of the city's four community centers was run by a church. Ermasova (2014) The results of this grand experience were highlighted in article in Wall Street Journal (13 Apr. 2010). Some results were positive. For example, the Pioneers Museum has raised enough money to keep its doors open this year and to hire consultants to develop a plan for it to go private. Other results were negative. Poor neighborhoods reduced municipal programs because they had trouble raising enough money to cover the costs of popular municipal programs like after-school child care. Also closing big community centers wouldn’t help to keep kids out of trouble. If poor children are now growing up in increasingly disadvantaged neighborhoods, with more unemployment, poverty, and abandoned houses, the reducing of municipal programs may have quite profound long-term negative effects. The economic well-being of communities in Colorado Springs declined during the economic downturn in uneven ways. The Great Recession and reduction of municipal programs also led to increasing inequality at the neighborhood level. Next important problem is reducing public safety. According to the New York Times (08/07/2010), it can be “a 23 percent chance that all patrol units in Colorado Springs will be busy when someone calls the police.” Many Colorado Springs residents have said that they feel less safe. If the law-abiding citizens stopped going out at night or visiting parks, the city’s deserted open spaces could attract more criminals. Another negative long term implementations for the community will be following: Deteriorating capital infrastructure due decrease of public works; Economic degradation; Disparity between classes: Equity issues; Resentment between classes poor vs. rich Brain drain: talented people may move to other areas; Tourism industry will decline. It can be the example of policing concepts - “broken windows” theory, which holds that addressing minor crimes and signs of disorder can head off bigger problems down the road. Colorado Springs Property Tax Measure The measure proposed raising property tax every year for the next five years. The increase would start at $126 annually and end at $210, according to the average home price of $262,000 in Colorado Springs. According to city officials, the tax measure, if approved, is estimated to generate $27.6 million in additional revenue in 2010 and $46 million in additional revenue in 2014. Ermasova (2014) According to City Council Member Jan Martin, if the property tax measure is not approved in November, the city will be forced to make cuts. Some of the proposed budget cuts include closing all seven city pools, community centers and the city transit service. Additionally, cuts may include police and fire positions. The ballot language read as follows: Shall city taxes be increased $46,000,000 annually by increasing 2009 general property tax 6.00 mills, 1.00 additional mill per year for four years, continuing thereafter, constituting voter approved revenue change? Supporters In support of the measure, residents and city council members have formed a campaign specific to the effort, "A City Worth Fighting For." Early in the campaign the group argued that if the measure was approved the city would "continue to have one of the lowest property tax rates in the state," however in September 2009 the group removed the statement from their website. The group now argues that Colorado Springs, "Even with the full implementation of 2C in 2014, Colorado Springs will continue to have a low tax burden per capita, when compared to other similar size cities on the Front Range." Councilwoman Jan Martin, in a televised debate October 7th, stated that the tax comes down to stabilization of the city's income base, otherwise cuts to public facilities and services will be the result. City officials see it as a long term solution to their problem. Fire fighters supported the debate, noting that at least 35 firemen positions would be cut next year if the measure is not passed and funding is not provided sufficiently for the Colorado Springs fire department. A former councilwoman, Ellen McNalley stated that if this tax is not passed then disaster will come to the city, it will not be able to fund the proposed budget it needs to operate. The city can no longer rely on the sales tax alone that had supported it since 2006. Jan Martin continues her campaign to educate voters, helping them to understand that a tax is not necessarily a guaranteed bad thing, sometimes it is needed. Opponents Ermasova (2014) On the opposite side of the argument, there are issues with city spending that some residents have brought up as a reason to vote "No" on 2C. The fact that the city government claims multimillion dollar shortfalls in their budget, but then proceed to spend millions on new projects within the same budget year. Proponents say the tax is to get the city over the recession currently in the economy, but this tax does not have a limit, as many taxes do. Many believed the tax was doomed from the start; the bad economy played the major roll in people’s decisions. The city just stated that since the people chose not to raise taxes they will be forced to shut down facilities and even cut bus services. Colorado Springs is already a conservative city, so that also worked against this measure’s passage. Proponents say that what voters were telling the city was that they need to cut back on the size of the government. Increasing Problems in Colorado Spring during Budget Cuts Materials for Case from Articles: 1. Strapped City Cuts and Cuts. By Leslie Eaton Wall Street Journal 13 Apr. 2010, Eastern edition: ABI/INFORM Global, ProQuest. Web. 18 Sep. 2010. http://online.wsj.com/news/articles/SB10001424052702303411604575168030083419748 Like many American cities, this one is strapped for cash. Tax collections here have fallen so far that the city has turned off a third of its 24,512 street lights. But unlike many cities, this one is full of people eager for more government cutbacks. The town council has been bombarded with emails telling it to close community centers. Letters to the local newspaper call for shrinking the police department and putting the city-owned utility up for sale. A commission is studying whether to sell the municipal hospital. Another, made up of local businessmen, will opine on whether to slash the salaries and benefits of city employees. "Let's start cutting stupid programs that cost taxpayers a pot of money," says Tim Austin, a 48-year-old former home builder now looking for a new line of work. "It's so bullying and disrespectful to take money from one man's pocket and put it in another's." Such sentiments, which might draw cheers at a tea-party rally, are pretty much a mainstream view here in the state's second-largest city, the birthplace of Colorado's small-government movement. Almost a decade ago, voters imposed strict limits on how much the city government can spend. Ermasova (2014) Last November they turned thumbs down on a property-tax increase, despite warnings from city officials about a projected $28 million shortfall requiring at least a 10% cut in an already shrunken budget. And so, faced with dwindling revenues, intransigent voters and widespread distrust of government, this city of 400,000 has embarked on a grand experiment: It is trying to get volunteers and the private sector to provide services the city can no longer afford. Taxi drivers have been recruited to serve as a second set of eyes for stretched police patrols. Residents can pay $100 a year to adopt a street light. Volunteers are organizing to empty the garbage cans in 128 neighborhood parks. The city is asking private swimming programs to operate its pools, and one of the city's four community centers soon will be run by a church. Other cities are making similar efforts to harness community spirit to provide or pay for services, albeit on a smaller scale. Duluth, Minn., last year relied on the YMCA to pay for life guards at its city beach. Phoenix trains volunteers to remove graffiti that city workers used to erase. Many public libraries are asking donors who used to finance special programs to pay for basic operations. As cities around the country try to find new ways to deliver services, Colorado Springs could be an interesting model, says Christopher Hoene, research director at the National League of Cities in Washington. "It raises the question of what the contribution of residents will be, time or tax dollars?" Most of Colorado Springs's efforts are so new no one knows if they will work. There have been short-term successes. The Pioneers Museum, city-run since 1937, has raised enough money to keep its doors open this year and to hire consultants to develop a plan for it to go private. But some efforts already are stumbling. Poor neighborhoods, it turns out, have trouble raising enough money to cover the costs of popular municipal programs like after-school child care. Some skeptics say it is unfair and ultimately impractical to expect a few volunteers to shoulder burdens while everyone gets the benefits of their work -- what economists call the free-rider problem. "If people are not contributing their part, there needs to be a broad community-wide solution," says Richard Skorman, a prominent local businessman who for many years was the sole liberal on the city council. Boosters think the moves by Colorado Springs will be adopted elsewhere. "We're a model of how cities can creatively adapt to budget adversity," says Sean Paige, a self-described libertarian on the city council. "You can have great quality of life without a great big government at the heart of it." Many people here say the proper role of government should be limited to paving streets, paying police and firefighters and, if there's money left over, frills like parks. Those are, in fact, the only projects for which Colorado Springs voters have been willing to approve tax increases in recent years. Ermasova (2014) Mr. Hoene of the National League of Cities says there are plenty of potential pitfalls to relying on the community to provide services. Programs that might work for small, homogeneous towns, he says, may falter in big, fast-growing cities like Colorado Springs, where an increasingly diverse population tends to have varying wants and needs. Low-wage workers and the businesses that employ them may rely on a transit system, for example, while wealthier residents see no need to pay for a service they do not use. Colorado Springs is a conservative bastion that is home to the evangelical New Life Church, the influential Christian ministry Focus on the Family, and five military installations, including the U.S.Air Force Academy. In a state that helped put Barack Obama in the White House, Colorado Springs and its surrounding county voted overwhelmingly for John McCain. Households here are whiter, richer and far more likely to speak English at home than in Denver, 70 miles to the north, Census data indicates. But residents say the city is more diverse than it first appears. It has an unusually high percentage of veterans, and also is home to a big branch of the University of Colorado. The U.S. Olympic Training Center attracts athletes and tourists, and the spectacular scenery draws outdoor enthusiasts. At 8.9%, the unemployment rate isn't particularly high compared to the national average. But the area has never regained the high-paying jobs and the tax revenues lost after the high-tech bust in 2001, says Fred Crowley, an economist at the University of Colorado at Colorado Springs. It has lost more than 23,000 jobs since the start of the recession. The Colorado Municipal League says most of its towns and cities are facing drops in revenue, most of which comes from sales taxes, though Colorado Springs's problems are particularly severe. Some experts say local and state limits on taxes and spending may have made the situation worse. Those measures likely will prevent Colorado Springs from returning to previous budget levels anytime soon, even if tax revenues rebound. Over the last two years, the city has taken some fairly standard measures to cope with lower tax collections, cutting hundreds of vacant positions, encouraging early retirements, and reducing parks maintenance. But it wasn't enough, so the city asked voters to increase the property-tax rate. Residents, however, weren't in a generous mood. The property-tax proposal was resoundingly rejected, and the city soon announced what the then city manager described as "drastic service and program reductions." Firefighter and police jobs were cut, and city buses no long run on weekends and at night. Then came the plan to turn off the streetlights. Even that had its fans. While many people called to ask to have their lights turned back on, says Sue Skiffington-Blumberg, the city's spokeswoman, about 10% of the callers actually wanted their streetlights to go dark. Ermasova (2014) The steepest cuts were in the parks and recreation department, where dozens of workers were laid off. The city would continue to manicure a few big parks, but the smaller neighborhood ones would lose trash-collection. City officials hope to negotiate a deal with a big-box retailer that would allow residents to get discounts on riding mowers for voluntarily cutting grass in the parks. Mayor Lionel Rivera drew the line at allowing the animal-rights group People for the Ethical Treatment of Animals to plaster park trash cans with photos of a buxom woman wearing a lettuce leaf bikini. But he says if the group would help pay for park maintenance, a low-key logo would be fine -- and he is making the same offer to the Colorado Cattlemen's Association. "Maybe we can get a little competition going," he says. Dave Munger, president of the Council of Neighbors and Organizations, which includes about 180 neighborhood groups here, worries that neighborhoods with fewer resources will fare worse than those that are more affluent or better organized. "We're looking at the possibility of a culture of haves and have-nots if this lack of income extends," he says. Case in point: the city's plan to close all four of its big community centers, founded years ago to keep kids out of trouble. That decision put Mr. Paige, the libertarian councilman, in an awkward position. He has been a longtime advocate of shrinking government, first as editorial-page editor at the daily Colorado Springs Gazette and then through his Web site, Local Liberty Online. But when the city council tapped him to fill a vacancy last summer, Mr. Paige says, he promised to represent the views of the residents of his district, who want the centers to remain open. "I'm dealing with the city as it exists," he says, "not in theory or as I desire it to be." Mr. Paige's change of heart hasn't gone unnoticed. "Mr. Paige has gone over to the dark side," grumbles Douglas Bruce, who wrote both the local and state "Taxpayer Bill of Rights" initiatives that limit government spending. Late last year, Mr. Paige not only backed a proposal to spend $400,000 to keep the centers open through March 31 while supporters tried to raise private funding, he became their chief fundraiser. But coming up with the cash has proved hard. Just ask Brian Kates, who manages the Meadows Park Community Center, a converted strip mall with a cinder-block gym southwest of downtown. The center, which gets about 50,000 visits a year, serves a low-income neighborhood of low-rise apartments and bungalows. Mr. Kates has slashed the budget, laid off much of the staff, and raised fees. Supporters have sponsored everything from pizza dinners to jewelry-making lessons to bake sales. A chili cook-off "didn't make more than $50," Mr. Kates says with a sigh, "but it brought a lot of people in." Ermasova (2014) The city would save $1 million this year by closing the centers down. Backers have raised no more than $12,000, says the city spokeswoman. Late last month, the city council learned that a large evangelical church with an active community service program has agreed to operate one center. At Mr. Paige's urging, the council tentatively agreed to dip into its reserves to cover bare-bones operations at the other centers through the end of the year. Last week, the U.S. Olympic Committee said it would donate $250,000 over two years for sports programs, including summer camps at the centers. Another "rethinking government" initiative is Proud of Our Parks, which Steve Immel, an unemployed technology executive, created to empty the trash cans in neighborhood parks. Mr. Immel says he got the idea one day when he was walking his mutt, Timber, in Judge Lunt Park in his neighborhood northeast of downtown, and he noticed the trash cans were gone. Participants sign a contract with the city agreeing to make sure the cans get emptied, and then try to round up their neighbors to help. Mr. Immel has set up Web sites that allow the parks groups -- 38 have been organized so far – to communicate and post schedules. The first cans were returned the last weekend in March. Mr. Immel says he isn't sure how long the volunteer efforts will last. But he thinks they will be educational. After a while, "people will probably think, 'Gosh, we ought to hire someone to do this,'" he says. "Well, you did: the Parks Department." 2. Springs offers streetlight adoption program The Gazette. Tuesday, October 15, 2013 http://gazette.com/article/95802 For a price, Colorado Springs residents can restore power to some of the 8,000 to 10,000 streetlights being turned off by the city to save money. The city today announced a streetlight adoption program “to help interested citizens reactivate streetlights that have been turned off over the past six weeks as part of a $1.2 million cost-saving measure” under the 2010 budget. A year of service is $75 for a residential light and $180 for an arterial light, which serves larger, multilane streets, according to www.springsgov.com. Adoption fees will be prorated. The adoption fee may be tax-deductible, he said, suggesting donors consult a tax expert. Ermasova (2014) City officials didn't offer the adoption program before the streetlights went dark because they didn't want to hold up the deactivation while working out the adoption logistics, he said in an email. People who prefer to send a check can leave a message at 385-5903 (select option 1), to have forms mailed, faxed or e-mailed to them, Leavitt said. He said the first adopter came forward this morning. Colorado Springs Utilities expects to turn adopted street lights back on within 10 days, he said. “Streetlights that are turned off are wrapped with a strip of orange tape around the pole and many will have a red cap placed on top of the light pole. This will help citizens distinguish between lights turned off on purpose and those in need of repair,” Leavitt said. Adopted streetlights will have a strip of blue tape wrapped around the pole for identification, he said. He said about 5,300 streetlights have been turned off so far, saving about $760,000 toward the city's goal of $1.2 million. http://gazette.com/springs-offers-streetlight-adoption-program/article/95802#ef7uQ9VjzBFxlrhL.99 3. Governments Go to Extremes as the Downturn Wears On The New York Times 08/07/2010 http://www.nytimes.com/2010/08/07/us/07cutbacksWEB.html?pagewanted=all&_r=0 Plenty of businesses and governments furloughed workers this year, but Hawaii went further — it furloughed its schoolchildren. Public schools across the state closed on 17 Fridays during the past school year to save money, giving students the shortest academic year in the nation and sending working parents scrambling to find care for them. By the Police Department’s own calculations, there is a 23 percent chance that all patrol units in Colorado Springs will be busy when someone calls the police. Many transit systems have cut service to make ends meet, but Clayton County, Ga., a suburb of Atlanta, decided to cut all the way, and shut down its entire public bus system. Its last buses ran on March 31, stranding 8,400 daily riders. Even public safety has not been immune to the budget ax. In Colorado Springs, the downturn will be remembered, quite literally, as a dark age: the city switched off a third of its 24,512 Ermasova (2014) streetlights to save money on electricity, while trimming its police force and auctioning off its police helicopters. Faced with the steepest and longest decline in tax collections on record, state, county and city governments have resorted to major life-changing cuts in core services like education, transportation and public safety that, not too long ago, would have been unthinkable. And services in many areas could get worse before they get better. The length of the downturn means that many places have used up all their budget gimmicks, cut services, raised taxes, spent their stimulus money — and remained in the hole. PUBLIC SAFETY: LIGHTS OUT IN COLORADO SPRINGS COLORADO SPRINGS — It was when the street lights went out, Diane Cunningham said, that the trouble started. Her tires were slashed, she said. Her car was broken into. Strange men showed up on her porch. Her neighborhood had grown deserted at night, ever since four streetlights in a row were put out on Airport Road, the street outside her mobile home park. That is why Ms. Cunningham, 41, and her son Jonathan, 22, were carrying a flat-screen television out of their mobile home on a recent afternoon. “I’m going to pawn this,” Ms. Cunningham said, “to get a shotgun.” It is impossible to say whether the darkness had contributed to any of the events that frightened the Cunninghams. But ever since Colorado Springs shut off a third of its 24,512 streetlights this winter to save $1.2 million on electricity — while reducing the size of its police force — many residents have said that they feel less safe. A few miles down Airport Road a 62-year-old man, Esteban Garcia, was shot to death in April when he was robbed outside his family’s taqueria and grocery in a parking lot that had lost the illumination of its nearest streetlight. Gaspar Martinez, a neighboring shopkeeper, said that he believed the lack of the light was partly to blame. “You figure the robbers think that if it’s dark, it’s the best time to hit,” said Mr. Martinez, 34, whose store, Ruskin Liquor, is in the same small strip mall. Mr. Martinez said that he put more lights up outside his store after the shooting. The police, who arrested several suspects, said that there was no indication that the doused light had played a role in the crime — or, indeed, in any crimes in Colorado Springs, which remains Ermasova (2014) safer than most cities of its size. But this might be a case, they said, where perception is as important as reality. “All the sociologists have said this for years: what matters to people isn’t really the number of reported crimes, it’s their perception of safety,” said the city’s police chief, Richard W. Myers. “And let’s say we don’t see any bump in crime — that would be a good thing. But people don’t feel as safe. They’re already telling us that, even if the numbers don’t bear that out. So do we have a problem? I think so.” Chief Myers said he worried that if law-abiding citizens stopped going out at night or visiting parks, the city’s deserted open spaces could attract more criminals. One of most influential policing concepts in recent years has been the “broken windows” theory, which holds that addressing minor crimes and signs of disorder can head off bigger problems down the road. Colorado Springs is taking a different tack. To close a budget gap — the city’s voters, many of whom favor smaller government, turned down a property tax increase in November, and a taxpayer’s bill of rights makes it hard for city officials to raise taxes — Colorado Springs has stopped collecting trash in its parks, stopped watering many medians on its roads and reduced its police force. The sprawling city of roughly 400,000 at the foot of Pike’s Peak — which covers 194 square miles — made national news when it auctioned off its police helicopters. But less-heralded police cuts could have more impact: the force, which had 687 officers two years ago, is down to 643 and dropping. At any given time, the department estimates that there is a 23 percent chance that all units will be busy. So it has reduced the number of detectives who investigate property crimes, cut the number of officers assigned to the schools and eliminated units that tracked juvenile offenders and caught fugitives. Officers no longer respond to the scene of most burglaries, at least if they are not in progress. Natalie Bartling, a new mother, could not believe it when the light outside her home was shut off in April. Ms. Bartling, 38, had successfully lobbied for the light five years ago after a wave of vandalism and petty thefts hit her middle-class block. So this time she called daily until the city agreed to turn it back on. Ermasova (2014) “When it got shut off, it was like missing something,” she said on a recent night, standing under its glow. “Part of your life.” Ermasova (2014) Colorado Springs' Do-It-Yourself Government. By Zach Patton . Governing. September 2010 http://www.governing.com/topics/mgmt/Colorado-Springs-DIY-government.html The citizens of Colorado Springs must decide how much they want from their government, and how much they're willing to pay for it. On a hot afternoon in late summer, the city pool at Monument Valley Park in Colorado Springs, Colo., usually would be teeming with children and families -- the kids splashing, swimming and soaking up the August sun. But this year, the pool stayed quiet. Budget cuts forced the city to close all its swimming facilities. A few of them were taken over by a private swim club, but the ones that couldn't find a backer, like Monument Valley, remained shuttered. "This place ought to be packed," says Kim King, administration manager of the Parks, Recreation and Cultural Services Department, as she stands outside the fenced-off pool in Monument Valley Park. "This should be crawling with kids. But there's nobody here." Nearby, King points to a set of public restrooms housed in a small Spanish-style building clad in yellow stucco. Those are closed too, with signs on the door: "NOTICE: Due to budget reductions, this facility is closed indefinitely." Opposite that building is a moderate-sized pond with a small island in the middle. Today, the pond stands empty. The city can't afford to maintain it, and the water's been reduced to a stagnant, scummy puddle. Times are tough in the Springs, as veteran residents call it. Like cities throughout the country, this town has been hit hard by the recession. But its fiscal problems are especially severe. The city is famously right-wing, and property taxes here are some of the lowest in the nation -- in 2008, the per capita property tax was about $55. City revenue instead comes mostly from local sales taxes. As a consequence, Colorado Springs is feeling the downturn's effects faster and more sharply than other cities. At the close of 2009, the city found itself facing a nearly $40 million revenue gap for this year. So the Springs slashed its budget and enacted a series of severe service cuts to save money. Onethird of the city's streetlights were turned off to reduce electricity costs. The city stopped mowing the medians in the streets. (At one point earlier this summer, the medians were so overgrown with weeds that the city was in violation of its own code for property maintenance.) Ermasova (2014) The parks department was hit especially hard -- its budget was gutted from $17 million in 2009 to just $3 million this year. In addition to closing the pools and restroom facilities, the city pulled out all the trash cans from its parks, since it could no longer afford to collect the garbage. Four community centers and three museums were put on the chopping block, although private donations and some emergency public funds are keeping them open for the rest of the year. With maintenance money wiped out, the vast majority of the city's parks were left to wither and brown in the summer heat. Former flower beds downtown are now just messy tangles of weeds. And it's not just aesthetics. As money has gotten tighter over the past two years, the city has cut some 550 employees from its work force by eliminating positions or through outright layoffs. Of the 1,600 municipal employees left, 1,200 are police officers or firefighters. Municipal bus service has been reduced by 100,000 hours, meaning buses no longer run in the evenings or on weekends -- a problem in a place where the vast majority of transit riders have no alternative way to get to work. The police department auctioned its three helicopters on the Internet. Spending on infrastructure projects has essentially ceased, and the city faces a $700 million backlog in capital needs. It's a crisis, to be sure. But in this politically conservative, tax-averse town, it's also something of an experiment. After the impending cuts were announced in fall 2009, the city put a property tax increase on the November ballot. The measure was soundly defeated. Thanks to Colorado Springs' Taxpayer Bill of Rights (TABOR), which actually predates the state of Colorado's TABOR by a year, any proposed tax increase must be voted on by the citizens. With their vote, residents made it clear they'd rather suffer service cuts than see their taxes raised. As a result, other cities are watching, waiting to see if this exercise in stripped-down government might actually serve as a model during tough economic times. City Councilmember Sean Paige is one person who thinks scaling back government's role in the Springs is a good thing. "People in this city want government sticking to the fundamentals," he says. "There's a crybaby contention in town that says, 'We need to raise taxes and we need to get rid of TABOR.' But I think the citizens have made it clear that this is the government people are willing to pay for right now. So let's make it work." Ermasova (2014) Volunteer Efforts Replace Lost Services Colorado Springs' service cuts made national headlines when they were rolled out this past spring and summer. After reading the media stories, one half-expects the city to look like some urban dystopia: fallen trees in the streets, boarded-up buildings, roads left dark by switched-off streetlights, drivers swerving around giant, unfilled potholes. But when actually walking around Colorado Springs, things don't look that bad. The city is hemmed in to the west by Pikes Peak and other spires of the Front Range (the original "purple mountain majesties" in America the Beautiful, which was written here in 1893). Take away the mountains, though, and Colorado Springs could be any mid-sized American city. Downtown consists of a clutch of dun- and clay-colored mid-rises along broad, flat avenues. There's a small, walkable strip of bars and outdoor cafes. This city of about 420,000 residents also has something of an earthy, hippie side: Acacia Park, a leafy square at the north end of downtown, is ringed by art galleries, an indie music store, a Tibetan imports place, a hookah bar and an Afghan kabob joint. There's even a feeling of progressive urban planning that belies the town's Libertarian reputation. More than 70 miles of on-street bicycle lanes thread their way across the city, and the city manages another 100 miles of urban trails for jogging and hiking. Green spaces downtown are filled with eclectic sculptures by local artists. In fact, it's easy to walk around the place and wonder what all the fuss is about. So what if there are a few weeds in the medians? Or if some of the streetlights have been turned off? Is that such a price to pay for low taxes and limited government? Colorado Springs may have gained a reputation as a bastion of right-wing values and smallgovernment ideals, but the city hasn't always been quite so conservative. Thanks to several military bases nearby, as well as the United States Air Force Academy, there's long been a Republican bent to the area. But it wasn't until about 20 years ago that the Springs began to shift to the Christian right. In the 1980s, in a bid to diversify the area's economy, the city began actively courting non-profit organizations to relocate to Colorado Springs. Dozens of groups moved in, especially religious ones. At one point, Colorado Springs was home to the national headquarters of more than 80 religious organizations, including, most famously, the socially conservative Focus on the Family, which Ermasova (2014) relocated there in 1991. By 1993, Focus on the Family ran a 45-acre campus on the north side of town, with 1,200 employees. Other, similar groups followed, earning Colorado Springs the nickname of "the Evangelical Vatican." As local politics have swung to the right, Colorado Springs has become more virulently opposed to taxes: Since 1990, the local property tax rate has plunged 41 percent. The local TABOR law, implemented in 1991, imposes an inflation-based cap on the amount of revenue the city can collect. Any revenue over that limit must be returned to taxpayers. That's kept the city government lean and small, even before the recent round of cuts. The proliferation of non-profit groups has had another effect -- a strong current of can-do volunteerism in the community. As the government has scaled back its services, private organizations have, in many cases, stepped in. In addition to the citizen groups that have taken over some of the pools and one of the city's community centers, companies and non-profit foundations have helped raise funds for visitors' centers and other facilities. At the Phantom Canyon Brewing Company in the center of town, the front of the menu implores diners to "Save the Fountain!" by purchasing a new signature ale -- some of the proceeds go to keeping the water turned on at The Continuum - Julie Penrose Fountain, a giant metal loop that rains water down on kids in America the Beautiful Park. The city cut funding for the fountain a couple years ago. As the cuts worsened this year, the city has increasingly relied on these volunteers' efforts. By lining up residents to "adopt a trash can," the city's been able to return about one-third of the rubbish bins that were removed from municipal parks. Citizens can "adopt a street light" on their block and have it turned it back on by paying a donation -- between $100 to $240, depending on the type of light. The city has even discussed an "adopt a median" program, recruiting residents to trim the medians with their own lawnmowers. "This city has really stepped up, and I'm proud of it," Paige says. "It's almost like we're moving to a do-it-yourself model." But that's a concern for some, including Paige's fellow City Councilmember Jan Martin, who authored last fall's proposed tax increase that would have covered this year's shortfall and prevented the service cuts. "Right now, in this crisis, we've sort of lost the sense of the common good," she says. "There's a real sense of, 'I'll take care of mine. You take care of yours.'" Ermasova (2014) Look a few years down the road, she says, and the city's rich areas will prosper while the poorer sections of town will suffer. "The parts of the community that can't afford services will continue to deteriorate," Martin says. "And the neighborhoods that can afford to pay for street lights, parks, trash removal and medians will continue to prosper and be beautiful. I worry we're creating a city of haves and have-nots." Budget Cuts and Public Safety Implications For now, the outpouring of volunteer support has mitigated some of the most visible impacts of Colorado Springs' budget cuts. But there are bigger, longer-term issues, says Interim City Manager Steve Cox. "We get a lot of attention for the trash cans and the street lights, but that's just scratching the surface. There are deeper problems than that." One of those problems is public safety. Everyone agrees that the police and fire departments should be last on the list of cuts. Still, those departments have had to reduce services as well. In addition to selling off helicopters, the police department has slashed its ranks, says Chief Richard Myers. Property detectives have been cut by one-third, and the department has completely wiped out some units, including its fugitive-investigation group. "We've eliminated entire street teams out of our regional drug unit. In 2011, we're significantly shrinking the number of school resource officers. Our specialty units are just imploding." All in all, the department is down about 80 officers, from a high of 689 a few years ago. That's a significant cut, but what's worse is that the force already was stretched thin. "Most police departments in comparable cities would have 750, 800, maybe 900 police officers," Myers says. "Now we're down in the low 600s, and the city isn't shrinking." Even more challenging, Myers says, is that Colorado Springs covers such a large area of land. Geographically, the city is huge: Boston, Miami, Minneapolis and San Francisco could all fit within its borders. With a dwindling number of cops serving a growing population across a vast tract of land, residents are feeling the cuts. Officers no longer can respond to as many incidents in person -- if someone breaks into a car or steals a kid's bike, the police just take the crime report over the phone. And it's unlikely they'll have the resources to follow up on it, Myers says. "We're struggling with the fact that so many people can be victimized by property crimes and have it treated more as an insurance report and a cursory tick mark on the tote board, rather than us helping them try to solve their crime." Ermasova (2014) Technology is a problem, too. The police department already was lagging in technology before the latest cuts. Investing in them now would be impossible. For example, Myers points to in-car video cameras, a tech upgrade he implemented at his previous two posts as police chief in other cities. "That's standard in police departments; it's a routine tool in law enforcement," he says. "We don't have a single one in a squad car here." Despite all the reductions, Myers says he can't point to an uptick in crime. But he worries about the longer-term implications of a bare-bones force. Myers says he firmly believes that a proactive, decentralized style of policing, as it was proven in the 1990s, reduces crime, increases the public's confidence in the police and increases the collaborative kind of policing where citizens and police work together for long-term solutions. "And to now see us moving more and more and more to almost a completely reactive style of policing is just difficult for me to tolerate." Still, he says he recognizes that tough times call for tough measures, and if this is the police department Colorado Springs is willing to pay for, so be it. "My mourning period is over, and the focus now is on redefining the new norm. We're past doing more with less," he says. "We're doing less with less." A New Model of Government? Colorado Springs' fiscal day of reckoning has arrived. But the reason other cities are watching the Springs is because what happens here isn't necessarily just an extreme experiment in do-ityourself government -- it could be the future. Thanks to the city's heavy reliance on sales taxes, the revenue crisis was brought to bear last year. In other municipalities, where revenues rely more on property taxes, the problems may only be beginning. "Cities are really going to be hard hit at least through 2011," says Christiana McFarland, director of finance and economic development programming for the National League of Cities (NLC). Because property taxes are based on periodic assessments, there's an 18-to-24-month lag before the city feels the full effect of the downturn. "We're anticipating property tax revenues will take a huge hit this coming year." And cities already have been making cuts, according to NLC surveys. More than two-thirds have delayed investments in infrastructure or capital improvements. Another 22 percent have made cuts in public safety; 27 percent have reduced their spending in human services; and a full 71 Ermasova (2014) percent have already been forced to make cuts in personnel. "With the budgets already cut down to the bone," McFarland says, "they're going to start digging into the marrow." The big question is whether the cuts are part of a crunch-time crisis, or whether they represent a new era in smaller government. For her part, McFarland says she doesn't think the Colorado Springs model can be a long-term solution. "Cities need to get back to a basic level of delivering services, particularly in public safety." Meanwhile in Colorado Springs, the crisis is spawning broader conversations about what citizens expect government to be. "It really brings you to some fundamental questions that elected representatives should be asking themselves," Martin says. "It forces you to prioritize and decide, what is the role of government? And what services should the city be providing?" One thing seems certain in the Springs: The service cuts are here to stay. Thanks to TABOR, it could be years before the city is even able to return to 2009 spending levels. The pools may reopen and the medians may get mowed, but those services will likely be performed by the private sector. As public funds start to trickle back in -- and local sales tax revenues have been on the uptick so far this year -- they'll go toward rebuilding the police department and adding back some of the bus routes. And for many, that's just the way things should be. "I think we're plowing fertile new ground here," Paige says. "And I think we can make it work." Ermasova (2014) Discussion Questions: 1) What positive long-term implications do you see for the community? 2) What negative long-term implications do you see for the community? 3) What are some examples of extreme budget cuts you have heard from other cities? Do these examples provide any useful suggestions for Colorado Springs? (ex. privatization) 4) Given an expected $27 million budget gap, did the city manager, mayor, and city council act appropriately given the sentiment of the Colorado Springs community? 5) Given the Budgetary Objectives listed by the City Manager, What services do you propose should be cut? Would different stakeholders choose different priorities? 6) How do you propose more revenue should be generated? 7) What were some of the reasons for voting for and against raising property taxes in 2009? Given the implications of the “no” vote, do you think a similar measure would pass if proposed again? 8) “What matters to people isn’t really the number of reported crimes; it’s their perception of safety.” How do people perceive their safety and what types of events have led to that perception? What can the people and city do to solve some of the issues raised? 9) Did the elected leaders reach too far, should they have attempted a more incremental tax increase? 10) Is an adopt-a-street-light program or an adopt-a-trash-can program, a realistic long-term strategy? 11) Based on the cuts the city has made, are there equity issues that the city is not considering? 12) Given the Tiebout hypothesis, how would you expect the citizens of Colorado Springs to react to the cuts? 13) Based on what you have read, are there services the city should be contracting out or services that the private sector should be providing. Ermasova (2014) Case Notes for teachers (answers on Discussion Questions for Case) 1: What positive long term implementations do you see for the community? Smaller government Low taxes Prioritize spending on other services More efficient government operation Social activism: communities coming together to provide services o Sense of Pride and ownership o Community may like the Pay as go services Efficiency in the budget Chance for innovation: more services that can be privatized 2: What negative long term implementations do you see for the community? Potential increase in the crime rates o Due to cuts in police services Deteriorating infrastructure: public works Economic degradation Disparity between classes: Equity issues Brain drain: talented people may move to other areas Tourism industry will decline: negative impact on Economic Development of the community Resentment between classes poor vs. rich Richard Florida Effect! 3: What are some examples of extreme budget cuts you have heard from other cities? Do these examples provide any useful suggestions for Colorado Springs? Indiana State cuts from education Monroe county school corporation cuts funding for extra-curricular coaches Indianapolis shuts down the law library Chicago raises speeding tickets Atlanta shuts down public transit Bloomington privatizes parking meter system Useful suggestions: privatization can help 4: Given an expected $27 million budget gap, did the city manager, mayor, and city council act appropriately given the sentiment of the Colorado Springs community? Ermasova (2014) Yes and No. They were vague in their motives. Although people wanted smaller governments, they may have not voted against higher taxes if the government informed them about the exact services that were going to be cut. The community should have been informed. The government shocked the people by the sudden proposal of increasing taxes. They were vague on whether they wanted the taxes to last for long term, or if it was just a short term tax increase. 5: Given the Budgetary Objectives listed by the City Manager, What services do you propose should be cut? Would different stakeholders choose different priorities? Pick up the trash in the parks Decrease the number of lights Part time position of City Manager: he has a long term focus as he does not have short term election cycle. Should have informed the community. They should have had incremental taxation o Did the city manager made a rational decision? o Was it a scare tactic? o It is not smart to use scare tactics because playing games with voters can hurt in the long run o What is on their budget policy manual? Public safety is included but they still cut funds from police services Community : doesn’t want to close community center as it causes problems for children leading to crime and many other problems Social life will be affected as people would not want to get out of their house o Community would want to cut services where government can collaborate with private sector, such as parking meters o Community would want the violators of law to do community service to make up for cuts (working to pick up trash) o Raises crime issues Part time Mayor: -He would be less concerned The first rule when making budget cuts is to maintain the "safety net" to assure that vulnerable individuals are shielded from harm as budget cuts are formulated and implemented. This can be both a policy consideration and an individual consideration. Some services may be curtailed, but retained for more vulnerable individuals. Local governments have implemented budget cuts to providers with flat rate reductions without any guidance or rules. While this gives providers flexibility, it may also result in unintended consequences such as cutting of direct care staff without concomitant reductions in administrative overhead or managerial salaries and benefits. Ermasova (2014) 6: How do you propose more revenue should be generated? User fees Parking fees Convention fees Parking/speeding tickets Hotel taxes Charge for public safety at carnivals Selling assets Tourism taxes: tax burden on non-residents 7: What were some of the reasons for voting for and against raising property taxes in 2009? Given the implications of the “no” vote, do you think a similar measure would pass if proposed again? For: Colorado will still have lower property tax compared to other states Close the budget gap Public safety issues will be solved The money has to come from somewhere Against: Smaller government Did not see the need as government was spending money on other services Recession Unlimited tax (it was a long term tax instead of short term to fix the problem) It is hard to say it would not pass again. People may get fed up. On the other hand, the results may depend on who votes the next time. Due to the circumstances now, maybe more people and people who did not vote last time will vote next time and then it may pass. 8: “What matters to people isn’t really the number of reported crimes; it’s their perception of safety.” How do people perceive their safety now and what types of events have led to that perception? What can the people and city do to solve some of the issues raised? Community thinks that less officers are leading to more crime without any statistical prove Broken window concept o They stopped going out Ermasova (2014) o It affects private businesses Events: o Store owner was murdered after lights were cut and o People showing up at front porch Media plays a role in framing peoples’ perception (scare tactic) o Make the community realize what they are missing out on services o Make them look at the negative side of not voting for higher taxes Solutions: o The residents can move o Community watch can become a solution o Rake law in their hands: use your 2nd amendment 9: Did the elected leaders reach too far, should they have attempted a more incremental tax increase? Yes, Limited tax increase and limited cut in services would have helped Community was shocked so they didn’t react very well 10: Is an adopt-a-street-light program or an adopt-a-trash-can program, a realistic long-term strategy? No, because people may not feel obligated to help in the long run o People may move out o Free Rider Problem: people paying for lights now will feel used in the long run as other people are benefiting. 11: Based on the cuts the city has made, are there equity issues that the city is not considering? community center being cut o the middle and poor class being affected as they don’t have money to pay for other services somewhere else o Home Owner’s Association (HOA) Children are being suffered (poor vs. rich kids) access to services o Problems with labor force as they have to go home to take care of their children as there are no child care programs Poor neighborhood lights cut first and the government didn’t realize it Cuts in public transit o The working class is being affected o In the long term it would increase welfare programs which would cause more problems and will cost even more Ermasova (2014) 12: Given the Tiebout hypothesis, how would you expect the citizens of Colorado Springs to react to the cuts? Vote with their feet o Depending on mobility of the population: poor people may move more often as they rent homes o Also rich people from other areas can move in as there are low taxes and they can afford to pay for services Spill over affects 13: Based on what you have read, are there services the city should be contracting out or services that the private sector should be providing. Trash pick ups Parking meters Toll roads for visitors Ambulance services (advertisement on ambulances) Finally, it seems like the cuts are making the government more efficient. It is a trial and may work for better. At the same time poor and working class are being affected the most. Although this may make the community realize that they may need to vote for raising property taxes, it is causing equity issues within the community. Ermasova (2014) Application of the case study to classroom learning and teaching This case can be used in following courses: 1. In Seminar in Budgeting Topic: BUDGETING IN ECONOMIC DOWTURN. CUT-BACK MANAGEMENT. Topic: BUDGET EXECUTION, AUDITING, AND FINANCIAL CONTROL 2. Public Finance Topic : State and Local budget Topic: Property tax Multimedia links that support the case study 1. http://citydesk.freedomblogging.com/2010/04/26/city-kept-streetlights-on-inold-northend/2793/ 2. http://ballotpedia.org/wiki/index.php/Colorado_Springs_Property_Tax_Measure,_2009 3. http://ballotpedia.org/wiki/index.php/Colorado_Springs_Property_Tax_Measure,_2009#c ite_note-3 4. http://conventions.nationaljournal.com/almanac/introduction/area/co/ 5. Leslie Eaton. "Strapped City Cuts and Cuts. " Wall Street Journal 13 Apr. 2010, Eastern edition:ABI/INFORM Global, ProQuest. Web. 18 Sep. 2010. 6. Springs offers streetlight adoption program. By Daniel J. Chanacon and Joanna Bean http://gazette.com/springs-offers-streetlight-adoptionprogram/article/95802#oFZs7VtC3ZHOG6JP.99 7. The Gazette. Tuesday, October 15, 2013. http://gazette.com/springs-offers-streetlightadoption-program/article/95802#ef7uQ9VjzBFxlrhL.99 8. Governments Go to Extremes as the Downturn Wears On. By Michael Cooper. The New York Times 08/07/2010 http://www.nytimes.com/2010/08/07/us/07cutbacksWEB.html?pagewanted=all&_r=0 9. Strapped City Cuts and Cuts. By Leslie Eaton. Wall Street Journal 13 Apr. 2010, Eastern edition: ABI/INFORM Global, ProQuest. Web. 18 Sep. 2010. http://online.wsj.com/news/articles/SB10001424052702303411604575168030083419748 10. Budget of Colorado Spring in Brief http://www.springsgov.com/units/budget/2010/2010BudgetinBrief.pdf 11. Colorado Springs' Do-It-Yourself Government. By Zach Patton. Governing. September 2010 http://www.governing.com/topics/mgmt/Colorado-Springs-DIY-government.html Ermasova (2014) Author: Natalia Ermasova PhD of Economics, PhD of Public Affairs Assistant Professor DIVISION MMPA, COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION GOVERNORS STATE UNIVERSITY room C3340, 1 University Park, University Park, IL 60484 Home address: 2830 Chayes Park Dr. apt.C Homewood, IL, 60430 Tel.: 1 (812) 369-6155 cell phone E-mail: ermasova@gmail.com nermasova@govst.edu Dr. Natalia Ermasova is a PhD of Public Affairs (Indiana University, USA), PhD of Economics (Russia) Assistant Professor of College of Business and Public Administration at Governors State University, IL. Her primary research interests is risk-management, innovation management, and the state capital budgeting. Before starting her work in the USA, she worked as a Professor of Finance in the Volga Region Academy for Civil Services in Russia for 12 years and as Professor of Saratov State University for 2 years. She was Visiting Professor in Germany (Ludwigsburg Academy for Civil Services) and Fulbright Visiting Professor (SPEA, Indiana University). More than 45 books and articles were published in Russia. She can be reach at nermasova@govst.edu.