Aspen’s economy has been on fire this year, but the city’s financiers are still cautious about the future as elected officials begin deliberations on the 2022 budget.
Taxable sales through July are nearly $ 548 million, up $ 56 million from 2019, or 11% more. City Finance Director Pete Strecker forecast last week that August was up between 30% and 40%.
“We’re actually firing a lot better than we expected,” he told Aspen City Council during a working session on September 27th.
He briefed the council on the city’s financial position ahead of budget talks, which begin Monday and will last through November.
The local economy started slowly this year as the COVID-19 public health regulations were still in place, causing the months of January and February to decline by 30% and 15% respectively.
“We fought against the flow of everything, were in the red limits at the end of 2020 and went into 2021,” said Strecker. “But we’ve since started picking up speed in March and we shook off the early effects of COVID in the winter season and we’ve really thrived since then.”
But not all industries have recovered, including housing, which is a mainstay of Aspen’s economy.
Accommodation has decreased by 16% year-to-date compared to 2019, with a 7% decline forecast for the end of the year due to a busy summer.
“We’re still trying to get out of this hole that started earlier this year,” said Strecker, noting that transportation and tourism subsidies will take a hit as these programs are funded by the lodging tax revenue.
Even if there may have been a lot of space in the inn this year, this did not prevent the average daily price from slipping. The average lodge price in July was $ 668 and in August it was $ 609.
“Even if (the accommodations) are still not available, it’s amazing that we’re seeing prices like this,” said Strecker. “It looks like capacity utilization has decreased at first, but demand is heavily dependent on the billable prices, so we’re starting to fill the gap.”
Overall, Strecker predicts that taxable income will increase by 12% compared to 2019 and 20% compared to 2020.
We can only guess what the year 2022 will look like, but Strecker remains cautious and predicts the historical norms for a sales tax increase of between 3% and 5%.
“Domestic tourism really took off in the summer months,” he said. “If we go into winter and see COVID rise again, there is a small risk and we are a little concerned that the alarm bells don’t ring that say you need to retire.”
City director Sara Ott said Strecker has laid a good, solid foundation for where the city should go for the 2022 budget, which is forecast at $ 141 million.
“This information was very important in establishing the recommended budget,” she said.