Pitkin County’s financial health good despite virus impacts
Thanks to a large bump in sales tax revenue and 2020 financial planning that included fears of a recession, Pitkin County’s current and post-coronavirus budget outlook is fairly good, officials said Tuesday.
“Because we budgeted conservatively, it puts us in a better position to deal with some of the loss we’ll see this year,” county Budget Director Connie Baker said.
And while it’s too early to know the true financial impacts of COVID-19, county finance officials believe the pandemic will have an approximately $3 million negative impact on this year’s budget, and a possible $7 million impact over five years, said Baker and Pitkin County Manager Jon Peacock.
“Our foresight put us in a position where we can be strategic in how we approach this,” Peacock told county commissioners Tuesday during their regular weekly work session.
However, he warned that it was still early in the pandemic to accurately calculate the true impact. In a worst-case scenario, the county could end up having to absorb an approximately $13 million negative impact over five years because of the coronavirus, Peacock said.
“We’re trying to calculate the unprecedented shock to the economy,” he said, noting that analysts will likely need 30 to 60 more days for a better understanding. “It’s very, very early in the cycle of this economic impact.”
Pitkin County’s budget is generally made up of revenue sources that include sales tax, property tax, use taxes, fee-based monies and government grants. Of those, sales tax is the most volatile, Baker said.
Partially due to much higher 2019 sales tax collections, Pitkin County added $3.5 million more to its general fund that was initially budgeted back in December when commissioners approved the $141.7 million 2020 budget, Baker said.
That larger sales tax revenue turned out to be 22.4% higher in 2019 than it was in 2018, she said. The increased sales tax, which was reported to the county in February, was thanks to a 2018 U.S. Supreme Court decision that allowed the state to collect sales tax on internet sales beginning last year, as well as state court decision that positively affected the county’s sales tax collection, Baker said.
In addition, county sales tax collection was up 13% in January over 2019 and estimated to be 10% higher in February, Baker and Peacock said Tuesday. March sales tax is expected to be 50% to 60% lower this year than last March because the economy shut down midway through the month, Peacock said.
The upper Roaring Fork Valley naturally sees a dramatic decrease in sales tax collection in April because of the offseason. However, the combination of more people being kept in town this year than in a regular offseason thanks to restrictive public health orders and anecdotal information indicating an increase in online shopping might temper April’s sales tax losses to somewhere in the 15% to 20% range, Peacock said. The real question surrounds Aspen’s summer economy, he said.
“We will probably be unwinding (the public health orders) by then … but there’s been so many cancellations,” Peacock said.
Pitkin County experienced a 3.4% drop in sales tax collection after the 9/11 terrorist attacks and it took two years to regain the losses, Baker said. The 2008-09 recession forced a 17.4% drop in county sales tax collections, which took five years to overcome, she said.
Commissioner George Newman said he thinks the current situation is more akin to 9/11 than the Wall Street-triggered “sub-prime mortgage fiasco” of a decade ago.
“This wasn’t an economic crisis, this was a health crisis,” he said Tuesday. “So getting back to the 9/11 scenario … when people can travel again, it will provide a better turnaround timeframe.”
The county’s other revenue sources don’t look bad, either.
Property taxes are based on valuations done in June 2018, so revenue projections that fund the Open Space and Trails program, the Ambulance District, the Healthy Community Fund and the library won’t change, Baker said.
The fee-based funds — which include the Community Development Department, the airport and the landfill — appear to be in relatively good shape, she said. The Aspen-Pitkin County Airport is already slated to receive $3.5 million in federal stimulus funds, Peacock said Tuesday.
Finally, those departments like Health and Human Services, Public Health and Road and Bridge that rely more on government grants and not yet expected to be hard hit by the virus, Baker said.
Also, the county is not considering layoffs for county staff members, Peacock said.
Pitkin County’s outlook is a somewhat reminiscent of the situation in Snowmass Village, where the town manager said Monday that despite declining projected sales tax revenue, the municipality is on solid ground.
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Late July and August in the Roaring Fork Valley conjure up images of juicy size 10 and 12 green drakes on the Fryingpan, blanket PMD hatches on the Roaring Fork and prolific swarms of caddis almost everywhere.