Pitkin County financial outlook: ‘realistic,’ not ‘optimistic’
September 7, 2011
ASPEN – Pitkin County will base its 2012 budget on an economic forecast that, observed one elected official, is “realistic” as opposed to “optimistic.”
The outlook is buoyed by a 7 percent increase in sales tax revenues through June (4 percent was the projected increase for this year), but investment earnings will be negligible and development fees are expected to remain stagnant, county commissioners were told.
Property tax revenues supporting the county’s general fund, which pays for general county services, are expected to increase 3.7 percent in 2012. Increases are limited by Colorado’s Property Taxpayers Bill of Rights (TABOR) to the consumer price index and real growth, or new construction, which stands at 1.6 percent.
The gains in sales tax revenues are expected to continue in July and August, though those numbers aren’t yet available, said Tom Oken, county treasurer.
“Our sense was, you know, the summer was pretty strong,” he said.
The county’s Financial Advisory Board had forecast a 1.2 percent increase in sales tax revenues in each of the next five years, but based on this year’s collections, has revised the projection to a 2 percent gain over this year in 2012 and half-percent gains in each of the following four years.
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Still, the county wouldn’t get back to 2008 collection levels until 2015, according to the projections.
“We’re growing pretty slowly here,” Oken said.
“I don’t think it’s about getting back to 2008 numbers,” said Commissioner Rob Ittner. “This is the new norm. I think we should be budgeting with that philosophy in mind.”
Going into fall budget discussions, how the coming winter shapes up, snow-wise, is the big unknown, noted Commissioner Rachel Richards.
“As much as us looking at CPI or national trends, it’s going to be the snow gods that dictate our sales tax revenues,” she said. “I do think these are not optimistic numbers. They are realistic numbers.”
“We might as well also throw into the forecast the Farmer’s Almanac,” agreed Commissioner George Newman in reference to ski season snowfall.
After initially planning for a 3 percent gain in Community Development fees for 2012, the Financial Advisory Board is now predicting no gain from 2011, citing the continuing uncertainty in the construction market. The Community Development Department, which charges for plan review and building permit/inspection services, had been operating at about a $300,000 deficit, but staff reductions earlier this year are expected to nearly erase that shortfall over a year’s time.
While banks are beginning to loan money again, according to local banker and advisory board member Jonathan Feldman, they aren’t the sort of loans that once fueled a robust building industry in the county, which was centered in part on multimillion-dollar spec homes.
“That’s probably not going to be the case for at least 10 years,” he said.
And, while the county’s investment earnings used to hover at about $1 million or so, they are now down to about $250,000 annually. Projected earnings in future years have been pared back in the latest forecast.
“That’s our best guess of what’s happening, and it’s guaranteed to be wrong,” Oken said.