It might be good news only in comparison to a bad year, but some Grand Valley government entities report an increase in year-over-year tax collections.
According to its report for July, sales and use tax collections for the City of Grand Junction totaled $4.08 million, a 2.2 percent increase over July 2009. That increase comes on the heels of a June tax report that showed revenue was 1 percent higher than the same month last year.
Meanwhile, monthly lodging tax collections at local hotels registered the first year-to-year increase since December 2008, according to July reports from the city. Hotels in the Grand Valley collected $134,061, a 4 percent increase over the $128,853 collected in July of 2009.
Mesa County continues to report declines in its year-to-year tax reports, however. The county collected $2.39 million in July, a nearly 20 percent decrease from the $2.98 million collected in July 2009.
July reports reflect consumer spending in June since tax reports lag one month behind spending.
Lodging tax collections received a boost from the Ride the Rockies bicycle tour, which began in Grand Junction this year. The end of the junior college baseball world series as well as the Palisade Bluegrass Festival and Country Jam music festival also brought people to the Grand Valley in June.
Jennifer Grossheim-Harris, marketing and public relations coordinator for the Grand Junction Visitor and Convention Bureau, said Ride the Rockies was a difference from last year, but probably accounted for only a small portion of the increase in June hotel stays. A larger factor might have been the “staycation” factor in which more Americans travel short distances by car instead of taking longer and more costly vacations during an economic downturn. Most tourists visiting the Grand Valley come from Colorado, taking advantage of an attractive option for in-state travel.
It’s also possible a recent upturn in natural gas development activity in Western Colorado brought more energy workers to hotel rooms in June. “Some of our lodging properties are seeing more business travel,” Grossheim-Harris said.
Because September usually constitutes the busiest month of the year for local hotels, the VCB anticipates more good news when October reports are released. “We’ll have a good third quarter,” Grossheim-Harris said.
In addition to the regional draw that is the Colorado Mountain Winefest, the Pork and Hops Festival draws more people each year, Grossheim-Harris said. “It doubled in ticket sales last year, and has broken apart from the Winefest (weekend),” she said.
From a wider perspective, though, 2010 continues to track behind tax collections in 2009 across the valley, and there was a big drop in collections from 2008 to 2009.
Year-to-date, Grand Junction sales and use tax collections total $25.89 million, a nearly 11 percent decline from reports for the first seven months of 2009.
Declining revenues forced the City of Grand Junction to cut $19 million from the original 2009 budget, paring it to $130 million. The city began 2010 with a $134 million budget for this year, but expects to spend less because of budget cuts. By comparison, the city spent $157 million in 2008.
For 2010, the city instituted a 3 percent pay cut for employees, held off on filling some open positions, transferred employees to departments experiencing heavier demands and postponed the purchase of some equipment. There are 85 fewer full-time equivalent city employees than there were at the beginning of 2009.
While city officials assume the population of Mesa County continues to grow, that assumption will be tested when new census figures are released next year. Because the population has increased while city staff has decreased, the city estimates there are now 11.07 city workers for every 1,000 residents, compared to 13.66 workers for every 1,000 residents in 1988.
Now, the city is bracing for more reductions even as it contemplates borrowing funds to build a police station and refurbish Suplizio Field.
“We are in the process of preparing projects for next year,” said City Manager Laurie Kadrich.
The city is working to preserve a $20 million general fund balance for capital projects and economic development. One current capital project is construction of a 29 Road viaduct over the Union Pacific Railroad tracks. The city is splitting the cost of the project with Mesa County.
In addition to falling revenues for the past two years, city officials are nervous about the potential approval of three revenue-limiting measures on the November ballot.
Proposition 101 would gradually reduce the state income tax rate from 4.63 percent to 3.5 percent, eliminate the specific ownership tax on vehicles and reduce vehicle registration fees. Amendment 60 would reduce school district mill levies and repeal so-called local property tax “de-Brucing” measures named for Douglas Bruce, author of the Taxpayers Bill of Rights constitutional amendment approved by voters in 1992. The amendment requires voter approval for local and state governments to retain tax revenue above a prescribed number each year. Such approval is dubbed “de-Brucing.”
Amendment 61 would prohibit governments from bonding or entering into lease-purchase agreements. Such a measure could derail city efforts to bond for such projects as a police station.
And it could put a dent in revenue the city hopes to be able to use once bonds sold to finance the Riverside Parkway are repaid. The city repays $7 million on the bonds a year, with the final payment expected in about six years depending on tax collections.
If voters approve the ballot proposals, the city would have to reduce its budget by $7 million a year after the parkway bonds are paid, Kadrich said.
The amendments would result in between $12 million and $20 million in effects to the city, Kadrich estimated.
Such cuts would come on top of the belt-tightening that’s happened over the past 18 months. Recent cuts included suspension of the overlay program for many city streets. “I think the thing people are seeing now is the condition of the streets,” Kadrich said. And the condition could worsen if overlay projects are further delayed.
And there’s a potential further impact on city employees, including health care benefits. “Health care is one of the biggest expenses,” Kadrich said.
Retirement benefits, on the other hand, are not a huge expense, she said. That’s because employees help fund their own retirement through a 401K program. The city matches employee contributions, however.
To top it all off, Kadrich has asked each department to present three budget proposals for 2011: one that calls for a slight drop in spending, one that includes a 5 percent reduction in spending and one that accounts for the effects of voter approval of the three ballot measures.
County sales tax collections totaled $18.68 million through the July reports, down almost 14 percent from the same period last year. County collections include the portion of sales tax revenue the county contributes to local municipalities, including Grand Junction.
The county joined the city in reducing a budget that initially was approved in 2009 and cut the budget even further this year —to $141.95 million. The county instituted a salary freeze for most employees and unpaid furlough days for some workers. The county recently announced a proposed 2011 budget of almost $127 million, a 10.5 percent reduction from the 2010 budget. County administrators could change the budget before adoption in December.
Lodging tax collections totaled $601,551 for reports covering the first seven months of the year, a nearly 12 percent drop from the same period in 2009. Lodging tax collections peaked in 2008, when the city collected $1.5 million. Collections dropped to $1.21 million last year.
Most local government entities reached peak collection levels in 2008, prior to experiencing the full effects of the Great Recession, which took hold in Mesa County in early 2009. Despite the dramatic dips in collections, economic analysts often point out the current tax levels equate roughly to the collection levels of 2005, when natural gas development activity was ramping up in Western Colorado.
Although the Grand Valley is experiencing its biggest economic downturn in more than 20 years, tax collections are not nearly as low as they were during the oil shale bust of the 1980s. And local government leaders hope they don’t inch much closer to those low levels as they prepare budgets for next year.