Steamboat Springs tax revenue is expected to continue to grow
For Steamboat Pilot & Today
Steamboat Springs can expect further growth in its tax revenue, according to the city’s finance chief.
During a presentation before City Council last week, Steamboat Springs Finance Director Kim Weber said the municipal money source is likely to grow by 3%. That would represent a growth in revenue from $40.3 million to $42.3 million.
If Weber’s projection pans out, it would continue a trend of increases that has persisted in recent years, albeit at a slower growth rate.
“We’re being cautiously optimistic, but yet still keeping a conservative budget approach,” Weber said.
The city taxes a wide variety of products and services, including building materials, groceries, lodging, restaurant meals, retail products and utilities. In 2022, Steamboat Springs collected more than $8.8 million in sales tax revenue from general retail sales, about $8.3 million from lodging and related sales, over $6 million from restaurant purchases, more than $5 million from groceries, about $2.5 million from utilities, $2.2 million from sporting goods sales, and about $5.7 million from the purchases of building materials. The city also collected more than $1 million from liquor sales and about $500,000 from marijuana purchases.
In addition to Steamboat’s 4% assessment, city residents pay a combined 4.4% to the state of Colorado, Routt County and Steamboat Springs School District.
As of the end of March, revenues from the city’s exaction on taxable items was up 10% over last year. That represents a slowing from 2022, when the sales tax revenue through March had increased about 36% over the first three months of pandemic-impacted 2021.
Weber told City Council that on a category basis, the city’s revenues are “holding steady.” She also noted that the breakdown of tax revenue between the three finance seasons — summer, winter and “shoulder” — is expected to remain generally consistent with historical patterns. The city gets about 40% of incoming tax dollars during winter, about a third during summer and the rest during the other months of the year, Weber explained.
“I could run this report for 20 years and the percentages between summer, shoulder and winter don’t change a whole lot,” she said.
Weber delved into some economic prognostication to rationalize her projection. She said that, according to her research, the outlook is fundamentally positive for 2024.
“Last year at this time, when I was presenting to you, we were looking at a fairly significant decrease,” Weber said. “We were looking at a pending recession. Projections were down. Now, economists are saying, ‘Wow, we have economic resiliency’ or ‘We are now cautiously optimistic about how 2024 is going (to go),’ even to the point of talking about 2024 as a recovery year.”
The national economy has demonstrated growth in 2023. According to the U.S. Bureau of Economic Analysis, the country’s gross domestic product increased by 2% in the first quarter and 2.4% in the second quarter. Those are the third and fourth straight quarters of growth.
Along with the GDP increase, the nation has experienced disposable personal income growth. Personal disposable income rose 12.5% in the first quarter of this year, according to the BEC. Consumer confidence is also trending upward.
The situation in Colorado is much the same. After a decline during the second quarter of 2020 at the height of the pandemic, the state’s economic output has been on a consistent upswing.
Weber also suggested that the economic outlook may be darkened by conditions affecting employers.
“On the cautious side, there are still concerns on how the tight labor market is impacting the economy,” she wrote in a memo to council members.
The veteran finance director also warned council that lodging reservations are down, but noted in response to a question that this has not had a significant impact on sales tax revenues because lodging fees have gone up.
Steamboat Springs has no property tax and is heavily reliant on sales tax revenue.
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