As sales tax revenue continues decline, city of Steamboat faces tough choices for 2021 budget | SteamboatToday.com
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As sales tax revenue continues decline, city of Steamboat faces tough choices for 2021 budget

Employee Grant Young makes a few adjustments on a bike Wednesday at the Wheels Bike Shop in downtown Steamboat Springs. While city sales tax revenue was down in May, sporting goods stores were up 67% over last year.
John F. Russell

STEAMBOAT SPRINGS — Next year will bring a wholly different look to the city of Steamboat Springs as impacts of the COVID-19 pandemic will fully be felt.

With sales tax collections declining each month since the start of the pandemic, the city has been forced to make tough financial decisions. Because of that, officials believe many city services that residents are used to will not be the same in 2021.

Sales tax collections, which serve as the city’s primary source of revenue, continued its decline in May. The city brought in $1,393,577 in May, down almost 4% from 2019. While that decrease may not seem very large, the city’s general fund is down by about 16% from 2019. The city’s overall financial picture is 20% down, according to Kim Weber, city finance director.

Sporting goods were up 67%, liquor stores were up 32%, and grocery stores and other food sellers were up 14% in May over the same period last year. 

“It is evident that people are shifting their spending and activities to mirror the current Colorado Level 2: Safer at Home and in the Vast, Great Outdoors,” said Sue Davies, city budget and tax manager.

Weber found it interesting that she was able to confirm the majority of sales tax collected in May came from local residents and not visitors. The pandemic-induced lack of tourism during the month didn’t make for a significant dent in collections, which led to her conclusion. 

Looking to 2021, it’s Weber’s estimation that sales tax from locals will be down across the board by about 5% from 2019 and, from visitors, about 40% down.

In preparation for the beginning of budgeting season in October, Weber said she is feeling comfortable with her projections. Her projections used a conservative approach with a combination of prior-year trends, economic outlook for other markets and analyzing the split between local and visitor sales tax dollars.

She recommended the city budget for $21.75 million in sales tax revenue for 2021, which represents a 0% increase from what was budgeted for this year. 

Courtesy/City of Steamboat Springs

The question now is how the city can balance its 2021 budget.

“I’m hesitant to say let’s use some more reserves,” Steamboat Springs City Council Member Kathi Meyer said.

Over $2.8 million of the city’s reserves have already been used this year, according to Weber.

She presented council with three options to achieve a balanced 2021 budget: cut services and expenditures; use projected budget savings from 2020 and cut services and expenditures; or use projected budget savings from 2020, cut services and expenditures, and use reserves.

Staff recommended the third option.

“I would say we’re not in normal circumstances,” Weber said. “We’re not violating fiscal policies if council allows staff to balance the budget with reserves.”

Council Member Heather Sloop said Weber’s estimations weren’t conservative enough, and Meyer said Weber was starting from an optimistic position. Council Member Sonja Macys said the city shouldn’t look to use any reserves.

It was Council Member Robin Crossan’s idea to start with a bare bones budget for the community to see, then add things back in until a balanced budget is reached.

Weber’s budget projection will be re-evaluated with June and July’s sales tax collections, and any major economic changes by October, but it might not change much, according to Weber.

To reach Bryce Martin, call 970-871-4206 or email bmartin@SteamboatPilot.com.


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