Glenwood sales tax declines 21 percent in May
Post Independent Staff
Glenwood Springs, CO Colorado
GLENWOOD SPRINGS ,Colorado – With Glenwood Springs city sales tax revenues dropping 21 percent for the month of May compared to May 2008, Jeff Hecksel is concerned about the next year’s budget.
“Sales tax is the largest single source of revenue for the city,” Hecksel said. “With that size of reduction in that primary source of revenue, it has an impact on the budget.”
City officials plan the budgets in July, two years out, with City Council approving budgets on a yearly basis to give administration time to adjust the following year’s budget as needed, Hecksel said.
When planning for the 2009 budget, Hecksel said that they were working with the first six months of 2008 revenues and did not expect the declines they’ve seen through the first five months of this year.
“We had planned for the negative numbers in 2009. However we did not plan for the magnitude of decreases that we’ve seen,” Hecksel said.
“The declines were bigger than we had anticipated at the time we did the budget for 2009. We did see a trend for the negative numbers and tried to budget accordingly,” Hecksel added.
The 21 percent decrease in city sales tax revenues in May was the largest decrease, when comparing months, that the city has experienced so far this year. May brought in a reported $1,074,849 in revenue still.
However, with double digit declines for the first five months of the year, the city is already at a 17 percent decline in revenues for the year compared to 2008. That will definitely affect the 2010 budget where sales tax revenues are the primary source of funding, Hecksel said.
“We need to look at cutting expenses,” Hecksel said.
Sales tax revenues fund the city’s general fund, street tax fund, bus tax fund, capital projects fund, and acquisition and improvement fund.
Hecksel indicated that the city has considered furloughs, basically time off without pay, for city employees, as one way to cut expenses if the declines continue. However, Hecksel indicated that furloughs are not currently in effect and are currently just an option.
“[Furloughs] have been fairly common with municipalities throughout the state, it’s not uncommon,” Hecksel said. “A lot of entities are having to do that until their tax revenues rebound.”
As for city projects, Hecksel said that most of the larger projects have not been put on hold, mainly because the funds that pay for those projects are restricted funds and cannot be used for other things such as employee wages.
Hecksel also said that some of the construction projects are coming in with lower than projected bids, which helps with the lower revenue.
“It’s a very affordable time to get work done if you can afford to do it,” Hecksel said. “We will continue to do as much as we can because it’s a good time to do it.”
Typically, June, July, August, November and December are the strongest months of the year for sales tax revenues. But that was not the case in 2008 with the last seven months of the year posting declines. However, none of the 2008 declines were in the double digits.
City officials will begin budget planning for 2010 after the June revenues are calculated. Hecksel hopes the decreasing numbers may diminish with the busy month of June that saw two bike tours and the annual Strawberry Days Festival.
“We did have a number of people in town for a three-week period, so we are hopeful that June is a good month, but if that carries into July or August, we are not sure,” Hecksel said.
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State department of transportation crews are well on their way to clearing Highway 82 to Independence Pass, which should open on schedule May 27 at noon.