Delayed sales tax payments cloud Broomfield finances
About this series: BizWest is investigating the effect of the COVID-19 pandemic and resulting economic stress on municipal, county and state governments, including furloughs, layoffs and budgetary deficits. Articles will be published daily on various jurisdictions.
BROOMFIELD — The city and county of Broomfield has trimmed expenses in the wake of financial challenges presented by the COVID-19 pandemic. But the unprecedented health crisis leaves uncertainties on the full economic impact.
Gov. Jared Polis extended the deadline for Colorado retailers to remit sales taxes. Those required to submit on April 20 may extend their filing and remittance deadline to May 20.
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These extensions make Broomfield revenue projections difficult to pin down, said Brenda Richey, CFO for the city and county of Broomfield, during a special city council meeting on April 14.
Broomfield reduced its operational costs by furloughing 235 full-time and part-time workers, according to Carrolyn Romero, deputy director of engagement and innovation and spokesperson for Broomfield. Furloughs went into effect today and will last through June 30.
Employee health and severance benefits will be paid through the furlough dates. Prior to the start date, a workforce team assisted employees with applying for unemployment.
“We’re trying really hard to be good partners with our furloughed employees but again can’t imagine the toll it’s taking on them.” Romero said.
She added that if operations are impacted greatly with the smaller workforce, employees can be called back to work before June 30 with a 48 hour notice.
Along with furloughs, a hiring freeze was applied to all vacant positions. In a financial update to the council on April 21, Richey forecasted a reduction of $2,402,997 in personnel costs.
The community’s revenue stream comes 27.8% from sales tax, 28.4% property tax, 5.7% use tax and the rest from other sources such as grants. Richey believes that mid-May will paint a clearer picture for revenue projections.
“From the data of having the shelter-in-place requirements for a little over a month, retail sales are rapidly declining and unemployment is increasing, which is threatening our short- and long-term stability,” Richey said in a presentation to the council on Tuesday. “We still don’t know how the extended due dates for the sales tax payments play into our ability to begin the recovery process.”
As of now, 45% of sales tax revenue has been collected compared to last year. However, this is subject to change as the deadline nears.
Without definitive numbers, Richey predicted that revenue will be less than 2019. She predicted revenue of $104,665,702 compared to last year’s $120,290,837 with sales tax accounting for a large portion of the loss.
Richey added that grocery revenue saw an uptick by 7.5% and online sales sectors projected a 52% increase. However these rises are helpful, they’re not enough to mitigate the loss of other retailers.
Mayor Patrick Quinn said that the FlatIron Crossing mall brings in an estimated quarter of sales tax for Broomfield. The mall is temporarily closed.
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