Heed the red flags before digging a deeper hole

For the past few years, the Boulder Chamber and its Boulder Economic Council have recognized both the strengths and challenges to our economy at our annual economic forecasts and summits. The message coming out of the 2018 Forecast, though, is the most cautionary in recent memory: Although 2017 was an historically positive year, we see looming challenges, including in particular a labor shortage, rising regional traffic congestion, and high housing costs. Adding to this troubling outlook was talk of tougher competition from surrounding communities, with their offer of lower taxes, fees, and overall costs and their investment in business services, such as community-wide broadband.

And what toll have these shifts in the economic landscape already taken on our community? While the cause and effect relationship isn’t always direct, we may be experiencing some early signs of looming trouble.

According to city of Boulder finance reports, for example, our community experienced a total sales and use tax revenue decrease of 2.62 percent in 2017 over 2016. And this occurred during a period of relative economic health across the state and nation. With sales and use tax receipts accounting for nearly 42 percent of Boulder’s municipal General Fund budget, reports that our sales tax receipts are “stagnant,” while other surrounding communities are “booming,” should alarm all of us. By the numbers, last year the city of Boulder experienced a mere 0.18 percent retail sales tax increase while our neighbors, Longmont and Louisville. touted reported rises of 11 percent and 10 percent, respectively.

These numbers have very real implications for the programs and services  we enjoy as Boulder residents. We applaud City Manager Jane Brautigam for taking these fiscal matters seriously, with direction to her staff to begin the difficult process of assessing where they can trim elements of their budgets. The benefits of practicing basic fiscal prudence in our municipal budget aside, and while there may be a number of reasons for our tax revenue decline, we should recognize it as a stark reminder that we can’t take our current prosperity for granted.

Take Careful Aim

I once worked with a very smart operations director who was fond of a saying, “Ready, aim, aim, aim, fire.” The key message was to always assess where you are, evaluate program options, and thoughtfully consider the implications of proposed actions . . . before moving forward.  I hope the Boulder City Council will begin to take a similar tact: Let’s make sure we fully understand the economic consequences of our actions before plunging forward.

So how are we responding to the red flags? On tap for the city council agenda over the next few weeks are both a proposed increase in the Affordable Housing Linkage Fee on commercial development and potential permanent extension of the height moratorium. I will speak to these issues individually as we approach the decision dates, but suffice to say, these initiatives all have economic and financial implications for our community. One only needs to see the deep decline in year-over-year construction and business use taxes, 17 percent and 16 percent respectively, to recognize a negative trend. Are these a direct reflection of city of Boulder growth control policies and do they portend longer-term budget implications? Before we start digging that hole deeper, I suggest taking our hands off the shovel and taking more time to get the answers.

We are fortunate that our economy is strong and there are many reasons to have confidence in our future prosperity. Still, the red flags are rising and we ignore them at our long-term peril. Let’s heed the warning signs.

John Tayer is president and CEO of the Boulder Chamber of Commerce.

For the past few years, the Boulder Chamber and its Boulder Economic Council have recognized both the strengths and challenges to our economy at our annual economic forecasts and summits. The message coming out of the 2018 Forecast, though, is the most cautionary in recent memory: Although 2017 was an historically positive year, we see looming challenges, including in particular a labor shortage, rising regional traffic congestion, and high housing costs. Adding to this troubling outlook was talk of tougher competition from surrounding communities, with their offer of lower taxes, fees, and overall costs and their investment in business services, such as community-wide broadband.

And what toll have these shifts in the economic landscape already taken on our community? While the cause and effect relationship isn’t always direct, we may be experiencing some early signs of looming trouble.

According to city of Boulder finance reports, for example, our community experienced a total sales and use tax revenue decrease of 2.62 percent in 2017 over 2016. And this occurred during a period of relative economic health across the state and nation. With sales and use tax receipts accounting for nearly 42 percent of Boulder’s municipal General Fund budget, reports that our sales tax receipts are “stagnant,” while other surrounding communities are “booming,” should alarm all of us. By the numbers, last year the city of Boulder experienced a mere 0.18 percent retail sales tax increase while our neighbors, Longmont and Louisville. touted reported rises of…