Our View: Too soon to change course
January 9, 2011
November was the third month since July in which city of Steamboat Springs sales tax revenues exceeded the total from the corresponding month in 2009. That's a good sign for the local economy and a positive indicator that the worst may be behind us. But it doesn't mean local governments should loosen their tight reins on expenditures.
Although November's sales tax figures — which were released early last week — are preliminary, it's unlikely the 2 percent gain they show from November 2009 will vanish when the final adjustments are made. November is poised to join July and September as the only months since August 2008 in which sales tax revenues grew from the corresponding month the previous year. Significantly, the three were in the second half of 2010, and anecdotal evidence from a busy holiday shopping season indicates December could follow suit.
A strong December could mean the city closes 2010 with a surplus of a couple hundred thousand dollars more than what was budgeted. The city projected sales tax collections of about $16.1 million this year. Throughout November, the city had collected about $14.3 million. Not surprisingly, the total is nowhere near what the city collected in 2007 and 2008 — years that saw more than $19 million in tax revenues go to city coffers.
Although it's too early to say what 2011 will bring from an economic standpoint, there are other reasons for optimism. Yampa Valley Partners' latest quarterly economic forecast newsletter released Friday predicts gross retail sales to increase between 3 and 6 percent in Routt County for the first quarter of the year, which will reflect the national trend. Consumer spending was up in December, which isn't unusual for the holiday season, but also indicates that people are feeling more comfortable with the idea of spending more of their earnings.
City officials have been appropriately conservative in their budgeting during the past two years. Cost-saving measures such as staff furloughs have lessened the impact of what has been a very difficult time for many residents and businesses here. Despite recent indicators that the economy may be picking up steam, we urge city officials to stay the course and resist the temptation to restore nonessential services or staffing until there is prolonged evidence of an economic recovery.