Our View: Slow recovery necessitates caution
April 10, 2012
Signs of a slowly recovering local economy are encouraging, but they certainly aren't enough for the city of Steamboat Springs to deviate from conservative budgeting and spending practices. Rather, recent sales tax receipts combine with a poor end to an already lackluster ski season to affirm the need for local governments to wade cautiously into the second quarter of 2012 and beyond.
It's not all doom and gloom. Yampa Valley Data Partners' second quarter economic forecast for Routt and Moffat counties points to increasing consumer spending and a slowly rising consumer confidence index at the national level as reasons for optimism. The same forecast predicts year-over-year gross retail sales gains in Routt County, and an economic stress indicator suggests decreasing unemployment.
The report also acknowledges a shrinking number of homes for sale in the local real estate market, which is leading to price stabilization. The average median listing price for a Routt County home last month — $487,500 — represents a 6 percent increase from March 2011. The number of homes entering the foreclosure process also is declining.
However, sales tax receipts for the city of Steamboat Springs essentially are flat through the first two months of the year. They fell in January as compared to January 2011, and February's slight gain was nullified when accounting for the extra day resulting from the leap year. Given a record-breaking spring in terms of high temperatures and dry weather, it's likely March and April sales tax revenues will suffer from the disappointing end to the 2011-12 ski season.
So what does the community glean from the mixed economic news?
Local economic analyst Scott Ford summed it up nicely Monday when he told the Steamboat Today: "Things are kind of improving. In the big picture, the danger we have … is looking at late 2006 and 2007 as the 'normal' time. That wasn't normal. Just like way down isn't normal, way up isn't normal. Our basis of comparison shouldn't be Mount Everest."
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That's likely of little consolation to the many residents who purchased homes during the real estate run-up and who will continue to owe more on their homes than they're currently worth. But recovery has to start somewhere, and it's encouraging to see signs of economic stability here in Northwest Colorado. The city of Steamboat Springs has managed through the downtime by being overly conservative in its revenue projections and similarly cutting spending. That practice needs to continue until there's definitive proof that Routt County has turned the corner and is returning to a time of prosperity. Unfortunately, that still could be several years away.