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Colorado municipalities could face long-term fiscal crisis related to COVID-19 sales tax plunge

Reserves will last 6.7 months on average
Posted at 11:53 PM, Apr 23, 2020
and last updated 2020-04-24 08:11:31-04

DENVER — Empty parking lots at retail centers across Colorado are a sign of the pandemic's toll on businesses, and the impact on municipal coffers.

Sales taxes are plunging.

A recent survey of local governments by the Colorado Municipal League, Colorado Department of Local Affairs, Colorado Counties, Inc. and the Colorado Special Districts Association, show cities are bracing themselves for both severe revenue loss, and increased expenditures related to the coronavirus pandemic.

Not all municipalities offered an estimate of the total revenue decline. Of those that did, the average anticipated revenue decline is $10.5 million.

Kevin Bommer, the executive director of the Colorado Municipal League, said cities and towns are going to have to do some major belt tightening.

"They’re going to be delaying capital projects," he said. "They will see furloughs and lay-offs. We’ve already seen some of those. Obviously hiring freezes and delaying equipment purchases."

Bommer said in addition to the plunge in sales tax revenue, there has been a dramatic increase in spending related to COVID-19.

He said local governments spent large sums to accommodate employees working remotely, and more money to outfit those in contact with others with personal protective equipment (PPE).

Bommer added more PPE will be purchased in the weeks and months to come, because "it will be imperative that municipal employees providing services are safe."

"We are imploring the administration and the legislature to start up a program, with our participation, to help local governments get reimbursed for some of those direct expenses, to help stop that bleeding a little," Bommer said. "Assistance from Congress and allocation of funding either directly or through the state will be crucial to ensure that municipalities continue to be able to provide essential services to their residents.”

All across the state, cities are already tightening their budgets.

"We have furloughed or laid-off 280 staff members," said Loveland City Manager Steve Adams.

Adams also said his staff is working with CSU and CU to formulate models on how to cope with different revenue scenarios.

He said the pandemic is unlike any other major event they've dealt with.

"When there has been a major fire, or flood, we have been able to go somewhere and say, 'What did you do in the fire of 2010?' or 'What did you do here?' With this thing, nobody has ever been in this position before, so we’re all creating new space, and new ground to move forward with."

The city manager said he wants to keep the public safety department fully staffed, but other options, like delaying parks projects and sidewalk repairs, pay cuts and service reductions are all on the table.

"Even coming into this year's budget, we had to curtail how many days our library was open," he said. "In the future, we might curtail some of the days our rec center is open, or our library, or our cultural services area."

He said more furloughs would be at the bottom of the list.

Adams said the city's golf courses will re-open next week.

He told Denver7 that once his staff formulates recommendations on where to cut to balance the budget, they will forward the information to City Council.

He said they hope to do that by May 12.

Adams also said he's loosening some city regulations to help residents better cope with the effects of the pandemic.

One of his orders changes the sign code to allow businesses to erect signs indicating they're open curbside.

A second order deals with isolation.

"It allows people to use their recreational vehicles, their tents and other areas to sleep in, away from family members and loved ones they want to protect," Adams said.

It essentially allows people who may exhibit symptoms, or who may have been exposed, to camp out at home in isolation.

"We're very supportive of sheltering in place," he said.

"My staff wears a mask when they’re in a building, or when they’re outside, or anywhere where they have contact with others, because we understand the governor's recommendations," he said. "All our staff take their temperatures at home before they come to work, so we know how they’re doing each day."

Adams said he knows everybody is anxious to get back to work, "but we also appreciate how deadly this virus is, and that precautions must be taken to protect our workers, staff and community members."