FINANCIAL HIGHLIGHTS OF THE 2023 BUDGET

This section presents the highlights of the 2023 Budget. Following this section is detailed background information on the Town’s basis of presentation, budgeting and accounting, the Town’s budget and financial policies, and the debt service and financial obligations of the Town.

BUDGET DEVELOPMENT Short Term Factors Impacting Overall Budget Development

The Town experienced strong revenue growth in 2022. Growth in the Town of Parker and inflation were the primary growth factors for the Town. Additionally, changes to the municipal code in late 2020 and collaboration with the state on sales tax have increased the number of remote sellers remitting sales tax to the Town. Growth is expected to level off as inflation eases somewhat and also begins to impact consumer spending. Inflation is a mixed indicator for the Town because higher prices result in more sales tax revenue, but they also blunt demand and raise the Town’s operating costs. Also, in some categories such as construction, the rate of cost increases has exceeded the revenue growth in 2022; this trend is expected to continue into 2023. The 2023 budget reflects a flatter projected revenue growth rate as compared to 2022.

Another major impact to the 2023 budget is the level of capital needs throughout the Town, both within the community and Town government itself. As the Town grows and returns to a prepandemic level of service provision, modest expense growth must be balanced with necessary capital spending. The overall strong financial position of the Town guided planning for the 2023 capital program and the 10-year capital improvement plan (CIP). Cash reserves at the end of 2022 and beginning of 2023 are set aside in the Capital Renewal and Replacement Reserve Fund for near-term infrastructure needs.

On the operational expense side, the Town is managing cost-increases in every category in order to maintain the same programs and service levels. For the 2023 budget, growth in discretionary categories was contained as much as possible to accommodate these increases. To that end, the Town continued the new process from 2022 for prioritizing incremental expenses over $50,000. The process mirrors the existing scoring process for capital items. In 2023, not every capital need or incremental expense request was able to be funded. Items at the bottom of the priority list were not included in 2023, and will be revisited in future years if needed.

Finally, the impact of the COVID-19 pandemic was not considered for budget development as demand for cultural and recreation programming returned in 2022. These were the two departments most impacted by closures and restrictions. The Cultural department is well positioned for 2023 after ticket sales, rentals and class registration are projected to exceed the budget in 2022. The Recreation department has seen permanent shifts in demand for some offerings following the pandemic, but it also had a strong return to rentals and youth sports and programs. The town has taken steps to build up a minimum cash balance in these funds to hedge against any future impactful events, and the departments are continuing to work towards greater efficiencies in cost recovery and matching programming to citizens’ needs.