Sales tax slumps, city straightens out spending priorities
Glenwood Springs city leaders are starting to look at belt-tightening measures after the worst one-month slide in sales tax revenues in more than a decade.
For the fourth straight month, Glenwood Springs’ sales tax revenues have dipped below the previous year’s levels, with March 2002 showing a 3.6 percent downslide from March 2001.
“We’re starting to look at everything,” city manager Mike Copp said at Thursday night’s City Council meeting. “We’re looking at possible cuts.”
Copp said the city will try to avoid service cuts, but revenue shortfalls could leave no options if the downward spiral continues. It is not yet clear where the cuts would be made.
“We’ll have you a plan in four to six weeks,” Copp told council.
The city already has imposed a partial hiring freeze, Copp said. For now, the city will only hire people to replace existing open positions.
Mayor Don Vanderhoof said he can recall several times when Glenwood Springs’ economy has stumbled, including the oil shale bust fallout, some coal mine closings and when construction of Glenwood Canyon shut down.
“There are different things that have happened,” Vanderhoof said.
He said most of the revenue dropoffs are not cause for major concern, but a hit to the apparel and accessory sector does trouble him.
“I think we’re going to find something unusual,” he said, explaining that the drop could stem from clothing stores going out of business or an error in reporting.
The first of the most recent sales tax revenue drops came in the usually-brisk shopping month of December 2001, and has now continued through the first quarter of 2002.
Records show that tax revenues, compared to the same month a year earlier, were down 2.2 percent in December, 1.9 percent in January and 1.4 percent in February.
“We really thought March would be up. We were really surprised it wasn’t,” Copp said.
Despite December’s descent, year-end total revenues were still up more than 3 percent for 2001. But so far this year, cumulative revenues for the first quarter are down 2.4 percent.
“We do have a good cushion in the general fund, but I know council’s philosophy is to keep that cushion,” Copp said.
Much of the four-month sales tax revenue decline is a substantial drop in the apparel and accessories sector, which was off an average of 31.2 percent so far this year.
Other segments of the economy taking a hit in recent months are miscellaneous retail, down 5.9 percent; motels and hotels, down 4.8 percent; automotive service stations, down 4.7 percent; and furniture, down 1.3 percent.
The Glenwood Springs Chamber Resort Association’s Erin Alfstad said she was surprised to hear that hotels and motels were down nearly 5 percent.
“All our statistics show that we’ve actually done better than any other city in Colorado,” she said.
Some industries have stayed steady, and some even showed improvements during the first quarter.
Transportation and utilities, general merchandise stores and food stores stayed even with last year’s numbers, while building materials and supply sellers enjoyed a 4.1 percent increase over the first quarter last year.
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