High-country resort communities that rely on spending from visitors are seeing a rebound in sales tax collections in June and July, but it’s not likely the crowds will be enough to erase losses in March and April.
The declines in March and April were devastating, with most ski-resort anchored communities enduring 50% drops in sales tax harvests as resorts closed and visitation evaporated. Town councils in May slashed budgets, but near-normal summer crowds are floating revenues above the spring’s dire projections. Still, the murky horizon for the upcoming ski season is leaving most local leaders nervous and ready for more cuts. This year will mark the end of an unprecedented run for Colorado’s resort communities, which have logged record sales-tax harvests for several consecutive years.
A Colorado Sun review of taxable sales in 13 ski towns shows visitors spending about $500 million in the final two months of the ski season.
As the gravity of the pandemic settled in April, Crested Butte’s town council ran three scenarios for sales tax revenue declines. The council determined that the town had adequate reserves to counter a 25%, 50% and 75% drop in sales tax harvests for the year. Still, the town left a couple of jobs unfilled and cut some services that it has since added back as summer business exceeded expectations.
A 45% decline in sales tax collections in Crested Butte in March, followed by an 8% decline in April left the resort community with a roughly 21% decline – or $254,000 – in tax collections for the first quarter of 2020 compared to the same period in 2019. That quarterly loss was led by precipitous drops in tax revenue from bars and restaurants (down 39%), lodging (down 26%) and retail (down 17%). The town was projecting a loss of up to $2 million in sales tax revenues for 2020. But that projection has declined as summer visitors flock to the end-of-the-road destination.
“June and July have been bonkers,” said Crested Butte Mayor Jim Schmidt, who noted that preliminary glimpses at June business show sales tax down only 4% from June 2019.
That leaves the town pacing only 11% behind last year and July has been very busy.
“That said, we have no idea what’s going to happen next winter and I don’t think anyone else does either,” Schmidt said.
Steamboat Springs saw sales tax collections for March and April fall 27% compared to 2019. But the city’s diverse economy makes it less susceptible to the spending of tourists, with a growing population of location-neutral workers and a healthy manufacturing industry.
Locals provide about 60% of the city’s sales tax revenue with tourism accounting for the remaining 40%, said city manager Gary Suiter.
“So even when things are shut down, us locals need to eat, drink and spend money on necessities, so this provides a buffer from a down tourist economy,” he said.
Steamboat has been through two rounds of budget cuts. The first was not felt by the public, Suiter said, but the second will be as the city trims services.
“The 2021 budget will continue to be a challenge,” he said, noting the uncertainty around the pending ski season.
The Town of Vail saw taxable spending sink 54% in March and April and May was not much better.
Vail’s town council in May slashed its sales tax budget for 2020 to $16.8 million, down from $28.5 million. The council in May projected a 21% decline in all revenue streams – from real estate transfer taxes, construction use taxes and sales taxes – for 2020. Preliminary cuts target staffing, bus operations and events. But like other destinations, June and July business has been robust in Vail – including real estate sales – and projections made in the early stage of the pandemic may not be so dire.
Margaret Bowes, the executive director of the Colorado Association of Ski Towns, said her 27 municipal members are seeing exponential increases in the number of drive-up visitors.
“People are willing to drive much more for their summer vacation,” she said. “Summer has exceeded expectations, so if a council had a doomsday budget for 2021, maybe they are thinking it’s not going to be that bad.”
But digging out of the hole from a silent March is a big effort, Bowes said, suggesting that even a busy June, July and August will not be enough to erase losing the final quarter of the ski season.
Resorts towns got creative this summer. They banned cars from main streets, opening more space for visitors to shop and dine. They opened sprawling outdoor spaces for socially-distanced events. Mountain towns don’t have that kind of opportunity in the winter months.
“We can’t push into Main Street in January,” Bowes said. “So we are going to have to get real creative once again looking into winter and no one knows yet what that might look like.”
For ski resorts and resort communities built around the guest experience, Bowes hope the operators and local leaders work closely together this winter.
“If a resort can handle a certain capacity, but restaurants and hotels are very limited, what does that look like for serving our guests?” she said.
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