BizWest Economic Forecast: Cities expect closer partnerships after pandemic

Municipal leaders from the six largest cities in Northern Colorado and the Boulder Valley touched on multiple aspects of how they’ve managed the dual economic and public health crises of 2020, and how they think the shared trauma of the pandemic will bring them closer together.

The group spoke during a panel at BizWest’s Economic Forecast virtual event Tuesday.

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Sales tax dip

The onset of the pandemic last spring and the ensuing restrictions on non-essential businesses cut into the budgets of cities across the country that mainly rely on sales taxes to fund their operations.

Loveland city manager Steve Adams said the city in 2019 was anticipating a recession but not to the degree that the pandemic created. The city had to cut $8 million from its budget to fill the gap, mostly through furloughs, closing down some city buildings and delaying capital projects.

An effort to raise the city’s sales tax on non-food items from 3% to 4% failed in the November elections.

“(With) all the other things going on, it turned out to be not as good a time as we thought it would be, and it did not succeed. So we’re stepping back to take a look at that for the future,” he said.

Not everyone is dealing with a net loss of revenues. Longmont city manager Harold Dominguez said the city saw a 4% increase in its sales tax collections through November versus the projected 2.8% in its 2020 budget. The city’s $5.5 million shortfall primarily came from the loss of fee-charging operations such as recreation.

Sales tax increases were primarily driven by big-box stores, grocers and internet sales that all boomed during the pandemic as spending power was routed to businesses that were still open.

He also said liquor and marijuana sales grew in the past year.

“They say the one thing that’s recession-proof is alcohol sales, and so we definitely saw that in our community,” he said.

Approaches to reserves

Most of the city leaders said they didn’t use emergency reserve funds to shore up budgets despite a near-shutdown of commerce causing deep drops in revenue.

Broomfield city and county manager Jennifer Hoffman said that despite a 3% loss of revenue overall, the combined city and county decided to add to its reserves rather than tap it to offset losses.

The municipality took that approach because it expects several years of recovery to take place, and it didn’t want to dip into its emergency fund for a longer-term problem.

“All of us are taking a long-game, that there was no Band-Aid approach but rather a really deliberative approach knowing that this was going to be about a three-year journey that we were all going to be on,” she said.

However, Boulder Chief Financial Officer Cheryl Pattelli said the city dipped into its reserves alongside making several cuts to offset revenues that amounted to needing an 8% cut to the budget.

She said Boulder was harder hit than other cities in the area because fewer students returned to the city for classes at CU Boulder, there were deeper drops in tourism and because the city doesn’t have a big-box store base that could shore up its sales tax revenue.

“That has been one of the things that we’ve seen with other communities that have kind of gotten them through a lot of this. We don’t have a Costco, we don’t have a Walmart in Boulder. So that too has led to us probably faring worse than the surrounding communities,” she said.

Regionalism rising

After months of dealing with the same issues created by the pandemic, leaders in both of the Front Range subregions think that cities and counties will develop tighter bonds as the pandemic ends and economic recovery starts at a faster clip.

Roy Otto, Greeley city manager, said that the “Fort Lovely” triangle between Fort Collins, Loveland and Greeley in Northern Colorado has grown, and collaboration between the cities may buoy the rest of the region’s recovery.

“I think we are really growing a Northern Colorado metro area that gives us a resiliency to bounce back from this better than if we had been back in the ‘80s and three separate communities and maybe not interacting with each other that much,” he said.

The same regional approach is building in the Boulder area, particularly amid the ongoing pandemic. The COVID-19 Recovery Center for those experiencing homelessness or home insecurity is a joint effort among Boulder County and the cities of Boulder and Longmont. Dominguez said that partnership came about because none of those governments could handle the severity of that on its own.

“I think as we start looking at it into the future, we really need to start expanding that to the region, because the affordability crisis, homelessless, mental health, those don’t stick within our municipal boundaries,” he said.

Fort Collins city manager Darin Atteberry recalled his time working in metro areas like Portland, Atlanta and San Francisco that are made up of multiple municipalities working together with regional groups for health, transportation and other public services issues. He sees the same happening in Northern Colorado, with the trend accelerating because of the shared struggles each city is facing.

“At some point, Northern Colorado is going to grow up to a point where we say we’ve got to do something differently,” he said.

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