Presentation - Economic Update & Summary of 2010 Ballot Initiatives
City of Boulder
2010 City Council Retreat
January 22-23, 2010
Economic Update & Summary of
2010 Ballot Initiatives
Sales/Use Tax Revenue Forecasts
2008 2009 2010
Actual Projected Projected
City of Boulder 0.23% -1.93% 2.07%
Sales/Use Tax
Denver-Boulder- 3.90% -1.10% 1.10%
Greeley CPI
Retail Trade Sales (1.) -0.80% -11.20% 3.00%
Personal Income 3.30% -2.10% 1.50%
Growth
(1.) Average of Dec 2010 projections from the Colorado Office of State Planning and Budgeting
(OSPB) and the Colorado Legislative Council 2
Headwinds
• Bank lending remains tight
• Impacting commercial investment most
• Job growth continues to be of concern
• A recovery without job growth or slow growth
• Retail sales tax flags are saying "caution"
• Mid 2000s recovery driven by the consumer; not this time
• Decrease in wealth (home equity decline and pensions)
• Lack of access to credit
• Employment uncertainty
Tallwinds
• Real estate has remained more stable in Boulder
• Diversification of types of revenues
• Sales Tax 70% versus 45%
$100 million decline of 8% = $2M in services
• Unemployment in Boulder is lower than state or nation
• U.S. - 9.7% Colorado 6.7% Boulder County 5.4%
• Upward sloping yield curve continues to indicate expectations of
economic growth in the future ("when"?)
• Retail sales tax November with late remittances positive
• A new trend? Unknown at this time
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Retail Sales Tax •
Month to Month comparisons
(Jan 2009 to Dec 2009)
Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec
2.00%
0.60%
0.00°i° `
-2.00%
-2.19% I -2.42%
-2.60%
-4.00% - - - i
-3.95%
-6.00% -5.35% -4.76% - - -
-5.48%
-6.50°/q ~
-8.00%
-7.a8°/u -7.96%
-8.73%
-10.00%
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Total Sales/Use Tax
YTD Percent Change from Previous Year
15.00% 2008 Actual s 2009 Actual 2009 Revised Proj
10.00%
5.00%
1
0.00% - 1, r .
-'1.93%
-5.00%
-10.00%
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
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0 0 0
Retail Sales Tax
YTD Percent Change from Previous Year
♦ 2008 Actual 2009 Proj ■ 2009 Actual
8.00%
6.00% ♦ -
4.00% -
2.00%
0.00°x° ~
-2.00% -1.06%
-4.00% _
-6.00% - - -
■
-8.00% -
-10.00%
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
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Do We Need to Revisit 90'
BRC I Projections?
• Structural Trends transcend the recession
BRC projections are trends not a budget
• Trends take into account highs and lows
• City Budget 2010 and beyond
• Ongoing expenditures were decreased equal to revenue
projections so relative relationships have been maintained
. It is still 3% revenue and 4% expenditure trends
. Major update after five years
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Conclusions '
Re: Economy
• Recessions end and this one will too
• When and to what degree -are unknown
The latest sales and use tax report indicates
• The reductions made in the 2010 budget were necessary
• Retail sales tax trend is not clear at this time
• Continue the rigorous review for filling positions
. Restrain spending until the revenue picture is more clear
• Current projections for 2010 are in the process of
being reviewed.
• In the wings -next slide
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Statewide: Proposition 101
. Cuts annual vehicle registration fee to $10
• Cuts specific ownership tax to $2 for new cars and
$1 for all others
. Exempts first $10,000 of vehicle purchase from
sales tax
• Eliminates state and local telecommunications
charges. Allows 911 rates from 2009 but no
increases permitted
• Lowers the state income tax rate from 4.63 to 3.5%
COB impact 2011- $5.8 million estimate
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Constitutional Amendment 60
• Sunsets all property tax de-Brucings
• Future de-Brucings must be re-voted every four
years
• Property tax increases limited to 10 years
. Enterprises and authorities must pay property taxes
• Allows use of petitions to reduce property taxes in all
taxing districts
• Cuts school district mill levies in half (while this does
not directly impact cities it could have an impact on
passing property taxes in cities).
COB impact in 2011 - $4.9 million estimate
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Constitutional Amendment 61
• Prohibits any borrowing by state government
Local government borrowing (including bonds and leases)
or refunding (including enterprise funds) only with voter
approval
. After borrowings repayment, tax rates must decline by an
equal amount (even not repaid with a tax increase)
. Maximum limit on borrowing is ten years
• Per $10MM = $445,000 add'I cost per year
Impact: COB impact is a "what if" calculation:
Based on current debt and refundings -
$11.1 million estimate and tax reductions
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Preliminary Analysis
of Impact
BALLOT ITEM 2011 2014
ESTIMATE * ESTIMATE
(Full Phase-in)
Proposition 101 $ 5.8 million $ 7.5 million
Amendment 60 $ 4.9 million $ 7.9 million
Subtotal $10.7 million $15.4 million
Amendment 61 "What if' i
(increased borrowing costs and loss
of savings based on 2009 refundings $1 1.1 million $11.1 million
and other existing debt)
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• Does City Council have any questions
regarding the economic update or
summary of the state initiatives?
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