Grand Junction Manager reports increased sales tax revenues for first quarter of year; sees leaner times over the next 18 months
In the midst of local indicators that the economy is rebounding from the depths of the Great Recession, the city manager for Grand Junction cautions that recent increases in sales tax collections will not be the norm over the next 18 months. In fact, manager Laurie Kadrich reminds local people that the city’s forecast remains the same as it was last fall: a promising increase in sales taxes for the first half of 2011, compared to collections in the first half of 2010. Then, due to a slowdown in construction, sales tax collections will be about the same as they were in 2010 for the second half of 2011. 2012 could look even worse.
“We have little or no projects for the third and fourth quarters of this year and none for 2012,” said Kadrich, while conducting a public seminar on city finances June 8th.
Kadrich added a decrease in revenue for city government doesn’t necessarily mean private businesses and families will experience tougher times. Should members of households earn larger paychecks, save more dollars and obtain good returns on investments, they could find themselves in better financial shape in 2012 even as the city tightens its belt.
Kadrich acknowledged her forecast runs contrary to predictions from other factions in the Grand Valley. For example, a recent survey of members of the Grand Junction Area Chamber of Commerce revealed an increase in optimism, with more businesses planning to hire people than lay off workers in the coming months. There’s even disagreement over Kadrich’s prediction inside the walls of city hall. Jodi Romero, City Finance Director, thinks improvement in consumer confidence will continue to spur local people to do more shopping and add to the city’s sales tax coffers the remainder of the year. Kadrich told the audience she hopes Romero is right. But a further slowdown in construction could exacerbate the problems for a county that features unemployment estimated at 17 percent of the workforce—an economy that has lost an estimated 10,000 jobs since 2008. While the official jobless rate remains was 9.8 percent in April, Kadrich and other local analysts say the percentage of adults out of work is higher. The official unemployment rate counts only adults who are collecting unemployment insurance. It does not include people who haven’t filed for the insurance, people who no longer qualify for unemployment payments, students and the so-called underemployed. Kadrich said the city itself has some underemployed workers—they were hired to perform certain jobs, but were demoted and received pay cuts due to budget cuts over the past 2 years.
The city began to slice funds from its budget during the first quarter of 2009, as declining sales tax revenues in the first quarter of that year sounded the alarm that the recession had hit the Grand Valley. The downturn has been drastic since then. Total government revenue locally has dropped 23 percent in 2 years. Sales and use tax revenues in 2010 were $12.5 million lower than in 2008. The $46 million in sales and use tax collections for last year was the lowest amount since $42 million was collected in 2005.
“In 2008, (Grand Junction Mayor) Gregg Palmer was on national TV because we were the best economy in the country,” said Kadrich. Robust construction and energy industry activity provided the country some positive financial news in the midst of a recession that began in 2007.
“We had a very good economy and then we had the recession,” said Kadrich. Since 2008, the loss of 10,000 jobs represents the largest percentage drop in the nation, said Kadrich. The number represents a loss of 1 out of every 8 jobs in Mesa County.
Cuts at the local government level and at School District 51 reflect the nationwide situation this year. Nationally, state and local governments eliminated 30,000 jobs in May, the seventh consecutive month of government layoffs. While government and education added jobs during the past few recessions, both sectors have been cutting jobs as the nation shifts funds to national health care reform, and to the long-standing Medicare and Medicaid programs. The Great Recession and ensuing soft economy have led to reduced numbers of people paying taxes and an increased number of people requesting tax-funded services. Government cuts have resulted in fewer government contracts for construction companies, which in turn leads to continued high unemployment in that sector. The jobless rate among construction workers in Mesa County is estimated at 17-20 percent at the Mesa County Workforce Center, where people must apply for jobs while receiving unemployment benefits. As Kadrich noted, government funded projects such as the 29 Road viaduct and the new downtown police station are the last major projects on the city list. In the private sector, the American Furniture Warehouse building near downtown is set to be completed late this year.