Boulder’s economy still in post-COVID recovery
Saturday, May 28, 2022
Boulder’s budget is almost but not quite back to normal after the devastation of COVID-19. The city could see a return to 2019 earnings next year – if inflation, global and national strife and other economic challenges don’t derail progress.
“The strategies taken by the city in extremely uncertain times, combined with a faster recovery of revenues exceeding projections, have resulted in a positive financial situation for the city at the dawn of 2022 and the development of the 2023 budget. … The 2023 budget will represent a continued recovery from the pandemic with many sources of revenue returning to pre-pandemic levels or above.
Sales tax — which funds most of the city’s spending — rose 19% last year as people returned to restaurants, shops and (especially) travel. Taxes on hotels, short-term rentals and other accommodations have also increased.
Sales tax revenue, 2020-2021
Clothing stores up 39.6%
Consumer electronics up 33.2%
Retail trade up 32.3%
Eating places up 39.6%
Lodging tax (hotels, lodging) up 94% ($3.1 million)
Short-term rental tax up 103% ($588,000)
Pearl Street Mall up 68.7%
Downtown up 36.3%
29th Street Mall up 20.6%
Uni Hill up 18.6%
In fact, the only thing people are spending less on is groceries and weed, according to municipal sales tax data.
Grocery stores down 5.9%
Medical marijuana down 34.5%
Recreational marijuana fell 5.6%
Despite the strong recovery from 2020, sales tax revenues are still below 2019 levels by approximately 4%. Parking and hotel taxes (which represent a smaller share of the budget) are still down 44% and 27%, respectively.
Even so, Boulder’s recovery was much quicker than expected. The city was able to add $63.5 million to the 2021 budget after drastic cuts in 2020, due to higher-than-expected revenue and federal stimulus dollars.
They also didn’t have to touch Boulder’s emergency fund — a move some elected officials criticized on Tuesday night, given the hundreds of layoffs and unpaid leave days imposed on staff.
Social impacts 2020
56 layoffs (including 7 fixed-term positions that ended early)
6 unpaid vacation shutdowns – all employees (except Fire, Police and Rangers OSMP emergency personnel)
Note: Lost wages were reimbursed to affected employees in 2021
Non-standard (seasonal, temporary or trainee staff):
“A pandemic is the ultimate emergency,” Councilman Matt Benjamin said. “What urgency were we expecting? We could have used those reserves to really uplift and support our community.
He and Councilman Nicole Speer argued that staff cuts played a role in the city’s high turnover and vacancy rate. The city’s swimming pools have had to reduce their summer hours, for example, due to the inability to hire lifeguards. Deputy Finance Director Kara Skinner said many jobs are likely to remain unfilled next year.
Staff defended their budget decisions, noting that they had planned to withdraw about $2.5 million from emergency reserves, but revenue quickly rebounded. Everyone is fighting to keep and hire workers, they said, not just Boulder.
The emergency money is for “sudden, short-term shocks to our system,” Deputy City Manager Chris Meschuk said. “Fires, floods” – to which Boulder is particularly vulnerable – “where it happens so quickly and you recover quickly.”
With the pandemic, “we didn’t know how long it was going to be and what was going to happen,” Meschuk said.
“We were making decisions quickly when our income was declining rapidly,” Skinner added. “We didn’t have a lot of history to build on. From a budget point of view, we thought it best to make some cuts. It’s really hard for an organization to cut and realize that we haven’t cut enough.
Boulder has worked for several years toward the goal of having 20% of its operating budget in emergency reserves. The city currently has 19.5% in this fund.
The city’s coffers are expected to continue growing through 2023, but economists are watching the war in Ukraine, as well as rising inflation, which is rising faster in Colorado than elsewhere.
UC economist Rich Wobbekind said: “The question is, is the economy really slowing down or is the economy going into a recession next year?”
The city will continue to be “conservative” in its spending plans, staff said. The budget process for next year has already started. Public engagement will begin on September 8 A council meeting where members delve into topics of community interest and city staff present r… with hearings and votes scheduled for October 6 and 20.
Read a thread on Tuesday’s budget
— Shay’s Castle, @shayshinecastle
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