October 4, 2022

To the Honorable Mayor, City Council and Citizens:

The budget is designed as a management guide, an executive planning document, and a financial report. It is based on the efforts and input from citizens, City Council and City staff. By working together we develop a balanced budget that plans, sets objectives for the coming year, and defines the purposes and resources to achieve those objectives.

It gives me great pleasure to present the Fiscal Year 2023 Proposed Budget. This budget continues to maintain our mission, which is providing efficient city services, effectively maintaining city assets, managing growth, while remaining accountable, ethical, fiscally responsible, and collaborating with regional partners to improve the quality of life for our entire community.

Over the past two years, the global economic environment has faced many headwinds associated with the effects of the pandemic. The impacts transcend locally, the economic data and lasting impacts of the pandemic continue to make it extremely difficult to build an annual budget. The pandemic brought several economic issues that affect the City operations and citizens including supply chain disruptions, workforce shortages, high inflation and fuel prices. In 2022, inflation reached a 40-year high and is expected to curtail in the middle of 2023. The 2023 budget was assembled with these challenges in mind, while continuing to be guided by the City’s mission, vision, values, goals and align with the strategic plan to continue to foster a culture of innovation.

In the goal area Financial Excellence and High Performing Government, the 2023 Proposed Budget reflects movement towards budgeting for outcomes. 2023 is the first year the City will implement the Budgeting for Outcomes process to identify the various programs and services that should be funded to achieve different community outcomes in the Strategic Plan. Rather than focusing on organizational structure, Budgeting for Outcomes focuses on outcomes and results, putting the community’s values and priorities first. Every funded budget item impacts at least one goal in the City’s Strategic Plan. This budget also includes performance metrics benchmarking against best-in-class cities.

With a significant rebound in sales tax revenue since the large decrease in 2020, the city can meet its fund balance policy obligations. With this revenue, a 3% Cost of Living Adjustment to invest in our workforce as well as a merit increase for the highest performers in the organization has been recommended. The 2023 budget is prepared with the assumption that sales tax revenue will increase 2%, as compared to 2022. The 2023 budget also includes the multi-year strategy to make reductions on interfund transfers to become financially sustainable. The 2019 Sales Tax transfer to the general fund has been reduced from $1.1 million to $425K. Reducing the transfer by $1.3 million over the past two years.

The city’s commitment to financial excellence has garnered national recognition. Most recently, the city was awarded a Distinguished Budget Presentation Award (the first since 2019), and a Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association.

The 2023 budget includes funding for employee development specifically, spending for the Growth and Momentum Learning series that is an investment in understanding the adaptions that are necessary for customer service, strategic plan achievement and employee engagement.

In the public engagement process affordability and economic opportunity was identified as the highest priority for the community specifically housing rank highest in importance to the community. In the 2023 Budget, the housing division will add a coordinator position to increase capacity around workforce and affordable housing needs; in addition, the housing division will invest over $800K in housing related projects. In addition to the housing efforts, the City will in partnership with the County, Economic Development Alliance, and other community partners, continue implementing the La Posta infrastructure investment strategy and advance annexation of certain parts of the La Posta Area. The City will leverage partnerships with private sector and non-profit entities to help shape and advance development in underutilized areas of the community for growth in the Durango Renewal Partnership- Urban Renewal Authority.

In Enhanced Livability and Sense of Place ,the budget continues to make progress on enhancing our livability and sense of place. The City of Durango will maintain a commitment to offer an abundance of parks and recreation programs by adding frontline positions in our Parks and Recreation Budget. These positions will increase capacity of programs in Gametime, Learn to Swim, and Gymnastics. The 2023 Budget includes funding for the Public Safety Communications Accreditation Program which provides the communications center with a process to systemically review and internally assess its operations and procedures and focus quality assurance, interoperability, emerging technologies, risk analysis, asset security, resources access, contemporary training, and a range of other operational functions. Public safety will continue the goal to improve community health and well-being by promoting a safe community where people can live, work, and play by strengthening community involvement in resident safety. The Durango Public library in 2023 will conduct ongoing research for expanding services and working as a partnership in the community.

In Diversity Equity and Inclusion, the City of Durango continues its efforts to be a community that is diverse and inclusive for everyone. To support this goal City Council made Diversity, Equity, and inclusion an all City-wide focus in 2023. The 2023 budget reflects $1.3 million dollars across departments supporting DEI efforts, ranging from translation and expansive language line resources to programs that expand accessibility and visibility to all members of our community. To serve as a model for the community, the organization will continue diversity, equity, and inclusion training into 2023 ensuring that our workforce understands the needs of our entire community while reviewing and enhancing policy development.

In Effective Infrastructure Network, The Durango-La Plata County Airport experienced record-breaking travel numbers in 2021. To continue to keep up with the demand, the airport will complete many large infrastructure projects. This will allow our community to continue to thrive economically from leisure and business travel. The budget survey outlined community requests in infrastructure, specifically walkability, access and flow in multimodal. To support this the City, has included multiple Capital Improvement Projects. The city will invest $7 million dollars in terminal infrastructure consistent with the 2020 Terminal Area Plan, this project includes approximately 4,400 square feet new building construction and heavy remodeling. This addition will add post-screening airline gate and hold room space, public restrooms, concessions, and utility development. Out of the Parks, Open, Space and Trails quarter cent fund, the SMART 160 project Trail East is incorporated in the 2023 budget to complete connectivity of the Animas River Trail from north side of River Road and Highway 160 intersection to the completed trail on the south of Three Springs. $3.5 million from the water construction fund will support the development of a tank project for State acceptance of clear well / auxiliary water tank, yard piping removals, relocations and installations, valve vault and entry point to distribution water quality monitoring structures and system controls.

In Environmental Sustainability and Resilience, there is a focus on reducing carbon footprint and increase investment EV and Solar Panels. In 2023, the Sustainability Programs Division will move to the City Manager's Office, moving the Sustainability function to the City Manager’s Office aligns with our cross-departmental focus and the overarching strategic plan focus on Sustainability.

In addition, the city will launch an essential & service worker program, offering rebates for E-bikes. Propose next phase of expanded community compost service based on results of market study with Table to Farm Compost. The city is researching water and trash/recycle management at multifamily residences in order to identify targeted solutions for improving water conservation and increasing recycling participation.

During the 2022 Strategic Plan Refresh, City Council added Engaged and Collaborative Governance to support Community outreach the indicates a strong desire to preserve and cultivate a sense of place and vibrancy as Durango grows. The 2023 budget includes efforts to expand public engagement with new website platform, focus website content to mesh with mobile users and a survey platform available to all departments.

To view the 2023 Proposed Budget visit https://stories.opengov.com/durangoco/published/thbFrEAWF I would like to say thank you to our City staff and City Council for the time and effort put into the budget process every year and for providing easy access for residents to access important financial information. We make strides to engage with the community, listen to residents, and secure a stable and successful future.

This budget continues progress toward achieving our community vision of Durango is an authentic, diverse multigenerational and thriving community. Our residents value and enjoy our unique natural environment and benefit from the management of our city's resources in a fiscally responsible, environmental, and socially sustainable manner.

Respectfully submitted,

José R. Madrigal

City Manager