Castle Rock – Most of the metro region is grinding beneath the wheels of an economic slowdown.
“So far, 2007 has been slow, and we expect 2008 to be just as slow, if not slower,” said Angela Copeland, spokeswoman for the town of Castle Rock.
A sputtering housing market is to blame for pessimism among those mapping out city and county budgets across the region, but they also point to dips in employment and slowing retail growth.
The nation is going through its slowest economic period in four years, according to the U.S. Bureau of Economic Analysis.
While Douglas County building permits are 52 percent below last year’s, Adams County is looking at a 58 percent plunge, Jefferson County a whopping 69 percent and Weld County 32 percent, according to a U.S. Census Bureau report.
In Castle Rock, building permits this year are expected to be one-third of their total of just over 1,500 for 2005, according to budget revisions.
And when the town drew up this year’s budget, leaders anticipated a 9.5 percent increase in sales-tax collections. So far, the growth rate has been one-third of that, creating a $600,000 shortfall for police, firefighters, ambulances, street repair, snow removal, transit and recreation.
By the end of July, Castle Rock department heads must submit idea lists for spending cuts.
$12 million in cuts in Jeffco
In Jefferson County, the picture also is grim as the county tries to slash $12 million from next year’s budget. A popular mountain health clinic was shuttered to save money, layoffs loom, employee benefits are being cut, and all departments will take a hit, county officials warn.
“It’s bad news; there is no way to say otherwise,” Jefferson County Administrator Jim Moore told employees in meetings last week. “This is the first time in 10 to 20 years that Jefferson County has less money to operate on than the year before.”
Douglas County is not as spooked.
“We see what’s coming and we’re dealing with it,” said budget manager Martha Marshall.
Denver was the only metro county that recorded gains in building permits during the first four months of the year compared with the same period a year ago, according to Census Bureau data.
Denver had a 20 percent increase in new homes, mainly on the strength of demand for higher-priced city dwellings, according to the Home Builders Association of Metro Denver.
But the city is still being cautious. Mayor John Hickenlooper’s office sent a memorandum to department heads in May saying the fiscal environment “is not bleak, but it is challenged.”
Weld County, a hot spot for growth since 2000, has seen a 32 percent drop in new homes, in a county that has no sales tax for a revenue cushion.
Don Warden, the county’s finance director, said other income has taken up the slack so far, including taxes on oil and gas production. “We’re probably in pretty good shape from a county perspective” given the bad news on housing starts, he said.
Greeley, however, is looking to raise development fees and take other steps to stem falling revenue, as building permits dropped from 706 in 2004 to 52 through May of this year.
Don’t panic, economist says
Despite such numbers, it’s too early for Denver’s prosperous suburbs to panic, said Fernando DePaolis, an economist for the Denver Regional Council of Governments.
The sluggish economy has a gumbo of causes, most of which could easily correct themselves, he said. The housing slowdown is largely because builders were ambitious in 2005 and 2006, allowing investments to get too far ahead of sales, DePaolis said.
“By no means are we in a recession,” he said. “This is the market adjusting itself.”
If some markets continue to decline, he said, Denver won’t suffer the way it did in boom-to-bust periods with gold, silver, oil and gas.
“Denver has got a more diversified economy now,” he said. “That’s definitely good for the economic health of the region.”
Staff writers George Merritt and Ann Schrader contributed to this report.
Staff writer Joey Bunch can be reached at 303-954-1174 or jbunch@denverpost.com.
