Gunnison council agrees to hold property tax rate; staff to find about $30,000 in general fund

Gunnison Mayor Stella and city council members agreed during a budget workshop Tuesday to hold the city's property tax rate at roughly the same level used two years ago and to identify budget adjustments to cover the resulting gap.

The decision came after city staff outlined the numbers behind the 'truth-in-taxation' calculation: the county's taxable value for the city rose from about $183 million last year to about $191 million this year, and the draft budget assumes roughly $325,000 in general-fund property tax revenue and about $120,000 for the library. City staff said keeping the two-years-ago rate would reduce property-tax revenue in the general fund by about $30,000 compared with the current draft and, because of how the state tax commission calculates required amounts, could increase the total shortfall to about $80,000 if no other changes are made.

Why it matters: property-tax decisions determine how much revenue the city can rely on for police, parks, streets and other general-fund services. Councilors repeatedly emphasized they wanted to limit direct tax increases on residents while balancing projected service and capital needs.

Staff explanation and numbers

City staff walked the council through the figures, including recent tax-collection line items and how the state tax commission projects required property-tax amounts. A staff member said the library's property-tax line rose slightly with new growth and noted the city's draft general-fund request sits below the state's calculated need if the rate is not adjusted.

"If everyone just hold the rate ... we've gotta find $80,000 in the budget somewhere," the staff member said, explaining the combined effect of the two-year comparison and the state's assumptions.

Council discussion and trade-offs

Councilors and staff discussed several ways to close the gap without raising the rate, including moving some salary costs back to enterprise funds, reducing capital reserves and trimming specific capital-outlay lines. One staff member pointed to three budget lines in the general fund where reductions would meaningfully change the truth-in-taxation calculation: (1) the capital-outlay/parks line identified in the packet, (2) a city-hall repair line, and (3) a line tied to council salaries and travel. Staff noted moving wages back into enterprise funds could reduce general-fund pressure by several thousand dollars.

The group also discussed transfers from enterprise funds (water and sewer) that have been used in past years to support general-fund operations. Staff explained those transfers are largely paid from higher utility revenues generated by a large, nonproperty-tax-paying facility (identified in the packet as the prison) and that increasing transfers further can help avoid raising property tax but reduces reserves available for utility projects.

Council consensus and next steps

After discussion and line-item adjustments proposed by staff, the mayor said, "Let's just do that," and the council agreed to hold the property-tax rate and pursue identified cuts and transfers to cover the roughly $30,000 immediate difference in the general fund. Council also directed staff to finalize a revised draft budget reflecting those adjustments before the next meeting.

Staff noted the council would still complete the truth-in-taxation process required by state law even if the rate is held; staff will return with a final budget and the exact calculations for the public hearing.

Ending

Councilors emphasized they wanted to limit direct tax increases on residents while preserving essential services. Staff will deliver a revised draft with the recommended changes and the final numbers for the truth-in-taxation hearing at the council's next scheduled meeting.