Littleton’s city finances are looking better than expected earlier in the coronavirus pandemic, but the city isn’t out of the woods yet. Littleton weathered April -- the most severe month for …
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Littleton’s city finances are looking better than expected earlier in the coronavirus pandemic, but the city isn’t out of the woods yet.
Littleton weathered April -- the most severe month for COVID-19 shutdowns -- with less damage to sales tax revenues than initially anticipated, according to data presented by city finance director Tiffany Hooten at a June 23 city council study session.
Retail sales taxes plunged 29% in April compared to a year earlier. General use taxes were down 24%. Sales and use taxes account for 78% of the city’s general fund.
Still, that decline was better than city staff feared, and Hooten said staff do not currently recommend any deeper cuts to city budgets and programs than have already been implemented.
“We’re in a good spot,” Hooten said.
Though originally scheduled to return June 24, 58 city staff members will remain furloughed for the time being.
Most of the positions are from the Littleton Museum and Bemis Public Library, which are offering only partial operations.
Other cuts include pay and hiring freezes and reductions in consulting and professional services.
The decline in revenue puts the city down about 8.3% year-to-date over last year, ahead of the 10% revenue reduction Hooten used as a best-case scenario in budget projections. Still, the future remains murky.
“Future revenues are unknown,” Hooten told council. “Our projections are going to change until we have better information about where the economy is headed. Currently the expectation is that this will be a deep recession, but a short one.”
City Manager Mark Relph said he has instructed each department to identify how it would make cuts of 10% to 20% if the need arises.
“It appears we’ll have the pandemic with us for another year,” Relph said. “Our economy will bump along, have its ups and downs, and we may see a second wave (of the virus). At the moment we’re rebounding quickly, but I don’t want us to take that for granted.”
The greater concern, Relph said, is the city’s five-year forecast, which is harder to predict. Also, the city’s capital projects fund, which pays for road repairs, building upgrades and the city vehicle fleet — including police cars — has long been in dire straits, and now faces even greater cuts, Relph said.
The time has come to start exploring new ways to increase city revenue, Relph said, including perhaps asking voters for a sales tax increase, or to institute a lodging tax.
“This is never an easy conversation,” Relph said. “Every city struggles with this topic, but now’s the time to take a step back and look at this.”
City staffers have long floated the lodging tax and sales tax increase, and previous citizen surveys tend to show strong support for both ideas.
Voters may also be asked to weigh in on allowing recreational marijuana sales in Littleton. Voters narrowly rejected a similar measure in 2016.
The pandemic has exposed the danger of Littleton’s hefty reliance on sales tax revenue, said Mayor Pro Tem Scott Melin.
“Financial planning 101 is to diversify your portfolio,” Melin said.
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