Don’t fix what isn’t broke
July 7, 2011
A recent article (“Basalt ponders if ‘boom’ rules are outdated in the ‘bust,'” June 20, 2011, The Aspen Times) and letters to the editor reopened the debate about a vibrant Basalt whose vitality needs improving. The letter writers all want the best for Basalt, even though their views are not the same. I would like to offer one more point of view: Basalt’s vitality is right where it should be.
This conclusion is based on comparing the years 2000 and 2010 Basalt sales tax figures, population growth and inflation. Over this 10-year period, the population of Basalt grew 44 percent, national inflation increased 24.3 percent and Basalt’s sales tax revenues increased by 101 percent. If you work through the numbers, Basalt’s sales tax revenues are still about 10 percent higher than one would expect based on population growth and inflation.
During the bubble of 2007 and 2008, Basalt’s sales tax revenues were 144 percent of the year 2000. Expectations were raised when the sales tax revenues topped $3.8 million in 2008. Surpluses accumulated, staff was hired and projects envisioned that didn’t seem possible before. Similar expectation were raised for some of Basalt’s citizens.
Basalt’s sales tax bubble has a parallel with the housing bubble. It turns out that the average value of houses nationally actually kept pace with the inflation rate. Yes, they went up faster for a while and a lot of people took equity out of their properties, which now they can’t repay because the values went back down to what would be expected from normal inflation. Overbuilding resulted in vacant homes, lots of homes for sale and even vacant store fronts.
Two things can be learned from this. The first is that when times are really, really good, don’t expect them to last. Most likely, the economy is passing through a bubble. When you are in a bubble it is prudent to set some earnings aside in anticipation of the time when things return to normal. The second is that change and growth usually will occur but at a slow steady rate. Focus on that and everything will be all right.
Basalt has been lucky (and also for the most part prudent). Even if sales tax revenues (this doesn’t include real estate taxes) drop another 10 percent over 2010, they will have kept up with population growth and inflation. I see no need to reduce affordable housing requirements or go to extraordinary lengths to “make things happen.”
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