Amid record economic activity in 2021, city advises caution going forward | News
As economic activity beat the City of Aspen’s projections for 2021, city staff warned Aspen City Council during a Monday business session that this scenario is unlikely to repeat itself this year. .
Since January 2020, sales and lodging tax has increased 24% in Aspen, Chief Financial Officer Pete Strecker said. Property transfer taxes also rose by 30% in February, leading to a lot of positive news in this year’s financial update.
“We had record sales in 2021,” Strecker said. “We exceeded what we expected, and a lot of that was because people were actually locked down, and even though they weren’t able to buy services, they were able to buy goods. .”
Economic activity also hit record highs across all sectors — rising double digits in some cases, and stunning numbers, according to Strecker — except one. The cannabis industry has only grown by 1% since 2020.
“This record was really carried by almost every industry in our local economy,” Strecker said. “There was only one industry in our mix that really didn’t recover, even to 2019 levels.”
The sales tax also exceeded expectations, generating $2.5 million more than the city had anticipated. The lodging tax has also done well, though Strecker said the city is cautious in its projections for the lodging industry in 2021 due to a decrease in travel and visitation. Accommodation tax increased mainly at the end of 2021.
Short-term rentals added $3.4 million to total taxes in 2021, which was the first year the city made a big push to collect STRs. RETT activity also eclipsed its previous record for the second straight year, with just over $21 million in council tax and about $10 million in arts tax.
“It’s been another really great year,” Strecker said. “Obviously these are again dedicated revenue streams. So it’s not benefiting the whole city, but it’s definitely good news for us, especially as we look to increase the amount of affordable housing for the community. This gives us more resources in the short term.
However, that likely won’t be the case for long, Strecker said, as new home inventories have fallen significantly.
The city is also wary of staffing issues and construction issues due to supply chain issues and labor shortages. City Manager Sara Ott added that she is focusing on committing to basic services before incorporating new ideas as inflation rates and staffing issues arise in the city.
“While sales broke records last year, I would like to warn that we have a lot of needs to maintain basic services before expanding services,” she said. “It’s not about letting these new ideas not happen, but maybe not happen now.”
She also advised council to look at increases in open market house prices in the Roaring Fork Valley, which she said is concerning given that much of the workforce in Aspen comes from Carbondale, Glenwood Springs and other lower valley towns.
“I was quite surprised when I saw the average Q4 selling price at Carbondale,” Ott said. “It’s enough that when I look at what people are paid here in Pitkin County, their ability to afford Carbondale drops dramatically, and it also drops dramatically in Glenwood.”
Council members said they were interested in seeing the data from across the valley, although it was unclear how that data could be used.
Before council moved on to other matters, Councilor Skippy Mesirow noted that the Aspen community is very lucky to have the ability to support itself during, say, a global pandemic, but that he hopes that the financial figures will not be linked to the whole. city perspective.
“I think we’re incredibly lucky to live in the community that we live in, from a financial standpoint,” Mesirow said. “More money is not always better. This is certainly true for individuals. You know, if you don’t have a lot, more is very helpful, but there are diminishing returns and there are times when too much money can ruin a person, and I think it’s the same for a community.
Strecker and city staff will return to council in June with an update on 2022 financial numbers before beginning work on capital planning and a review of the 2022 budget, which will be completed later this year.