GET BREAKING NEWS IN YOUR BROWSER. CLICK HERE TO TURN ON NOTIFICATIONS.

X

Long-term Boulder financial picture improving amid coronavirus as reopening advances, model shows

Gallagher, commercial property values sources of angst

Valet Julian Aceves cleans a luggage cart to sanitize it between guests at Hotel Boulderado on Tuesday. The downtown Boulder lodging institution has beaten the soft expectations of its leaders since resuming operations in June following a weeks-long coronavirus-induced closure that started started in April. (Matthew Jonas/Staff Photographer)
PUBLISHED: | UPDATED:

So far, so good.

That was the sentiment expressed in a Tuesday interview by Hotel Boulderado Green Committee Executive Housekeeper and historian Laurel McKown. The downtown Boulder lodging institution has beaten the soft expectations of its leaders since resuming operations in June following a weeks-long closure that started started in April, its first in a century, due to the coronavirus.

“The reopening for us is going well. June ended significantly better than anyone’s expectations. July has started off well, we had a very good Fourth of July,” McKown said. “Typically for us, people get out of town, go to the mountains. We had a very good July, better than we normally have. That was another good sign.”

Yet it remains a long haul back to a pre-pandemic economic pace, and restoring some consumers’ confidence in the safety of traveling and hotel stays is a hurdle that must be overcome by local businesses. Many remain well below typical revenues despite the crawl back to normalcy Colorado has begun, May municipal sales tax data shows, even as the city has made major adjustments including street closures and expedited business licensing to facilitate outdoor dining to support restaurants.

Housekeeper Luz Rodriguez sanitizes a room at Hotel Boulderado on Tuesday. (Matthew Jonas/Staff Photographer)

“This isn’t an easy recovery. We can’t just pick up where we left off in February and run with the ball,” McKown said. “Everyone has to rethink things, reinvent some aspects, like alleys becoming outdoor dining areas. I think it’s great the city, especially (the nonprofit) Downtown Boulder, has really gotten behind that and tried to help the businesses.”

Short-term financial pessimism for the rest of this year has worsened for Boulder as the pandemic continues to weigh on the local economy and May taxes flow in, City Council was told by city staff Tuesday. But the range of possible long-term forecasts being modeled by University of Colorado Boulder economists improved, with an uptick looking more likely in 2021 than it did previously.

“Of note for 2020, why this has pushed down is that the retail trade forecast has declined a little bit, the real GDP forecast has declined a bit, and so those declines and outlooks are impacting the results,” Boulder Assistant Director of Finance Kara Sinner said she was told by a top CU Boulder Leeds School of Business researcher. “For 2021, it looks a little more optimistic, and that’s largely because the retail outlook has actually improved, as has the real GDP outlook, as well as the employment outlook.”

Preliminary May tax data for Boulder showed total sales and use tax is down 7.5% year-to-date, or $4.1 million, a city staff memo said. More specifically, lodging taxes were down 59.4% year-to-date compared to 2019, short term rental tax revenue declined by 60.1% and the sugar-sweetened beverage tax declined by 26.4%. Eateries and retail establishments have taken big hits, too, despite the city moving quickly to offer lifelines by allowing transitions to outdoor business activity. Apparel stores have seen a 35.3% sales tax decline, home furnishing stores declined 36.7% and eating places fell 34.1%, while general retail is down 8.8%.

“General retail would have fared much worse without large increase from out of state, i.e. online, retailers,” the staff memo stated. “The rate of increase in food stores, including liquor stores, slowed, but still posted a 9.4% increase.”

Meanwhile, some experts in local governance are still calling on Congress to roll out another package of aid to municipal, county and state coffers to assist the economic rebound. Brookings Institution Senior Fellow and Policy Director Mark Muro contended in a June 30 essay that surges in infections in states like Florida and Texas show the “feel-good” moment over a positive May jobs report, which perhaps appeased Congressional appetites for more relief spending, “seems incredibly naive and remote.”

“A sizable relief bill is essential amid fears about the fragility of the country’s nascent economic recovery. Yet in ways even beyond that, the case for significant aid to states and localities has come roaring back,” Muro wrote.

For example, the Bureau of Labor and Statistics last month reported states and localities had already laid off more than 1.5 million government workers, Muro wrote, while the National League of Cities found more than 700 cities have halted plans to improve roadways, buy new equipment and complete upgrades to water systems and other infrastructure.

Boulder has laid off 56 standard and fixed-term employees, ended temporary roles of another 68 employees and has furloughed many more. But it has limited damage to the city staff’s work plan for this year, so far killing just one project, the middle-income down-payment assistance program approved by voters last year. There are plans to discuss a schedule to resume work on that next year.

“The magnitude of COVID-19’s fiscal shock on states and localities is more than even the best-run state or local government can handle without having to make deep spending cuts or tax increases,” Muro wrote.

In Colorado, though, without a “yes” vote on a statewide ballot measure this fall, residential property taxes might decrease even absent any votes by lawmakers or electors, thanks to the Gallagher Amendment. That rule ratchets tax rates on homes up or down to ensure that no less than 55% of the state’s total property tax base is derived from commercial real estate.

“Property taxes as a percent of total General Fund revenue has increased, particularly over the past 10 years as property values have increased,” the city staff report said. “This increase has resulted in a more diversified portfolio of revenue for the General Fund which will help stabilize that fund during this economic crisis.”

But much hinges on the results of the November election and voters’ decisions on the attempt to repeal Gallagher, as well as the possible strike to office property values that results from the newfound ability of many to work from home, staff noted.

“There is concern that if commercial property values are negatively impacted by the COVID-19 recession, the residential property assessment rate could decline to comply with the Gallagher Amendment. On June 9, the Colorado Legislature referred a constitutional amendment to the 2020 ballot that would repeal the Gallagher Amendment of 1982 and forestall this potential decline,” the memo stated.

blog comments powered by Disqus