The city of Denver’s sales tax revenue plunged 4.5 percent in October compared to the same month last year, the latest sign the slumping national economy is having a local impact, Denver Mayor John Hickenlooper announced in an e-mail to city employees on Wednesday.
The mayor said in the e-mail that he is working with local industry sectors and business leader to craft a economic stimulus plan and will announce some details later this week.
He added that his administration also is developing plans aimed at ensuring next year’s budget will remain balanced in the face of an expected decline in revenue. Those plans will be announced in the coming weeks, he said.
“The solutions may not be easy or desirable, but we are committed to minimizing the impact on employees and services by keeping our team members employed during these difficult times,” Hickenlooper said.
The mayor added that 857 city workers took a voluntary furlough day for the day after Thanksgiving, saving the city $221,586. Hickenlooper said that while other across the board general fund cuts aren’t expected for 2008, the Denver Department of Human Services, which relies on state and federal funding and is set on a different fiscal calendar, will institute a mandatory furlough for the day after Christmas for its roughly 1,200 employees.
The mayor said he plans to announce steps in the coming weeks that his administration plans to take to keep next year’s budget balanced.
The recent sales tax figures for Denver are the latest reminder that the slumping national economy is having a local impact. Those figures are considered crucial for the city’s overall fiscal health because sales tax revenue represents roughly half of the city’s revenues.
“National trends are not indicating significant improvements for the coming months and the decline in sales tax revenues will likely continue into 2009 as most major industry sectors are seeing large decreases nationwide,” the mayor said in his e-mail.
Ed Scholz, Hickenlooper’s director of budget and management, said the city budgeted a 5.3 percent growth in sales tax revenue for 2008. Through October, the actual growth in those revenues was about 3.1 percent.
He said if the trend continues, the gap in execpted sales tax revenue for this year will come in somewhere between $6 to $9 million below original projections.
Scholz said the city likely will have to tap reserves, but that budget cuts to deal with the revenue decline likely won’t occur until 2009.
“We’re developing a plan for 2009,” Scholz said. “The mayor and his administration are working on that. We will be coming out with details in the next few weeks.”
Christopher N. Osher: 303-954-1747 or cosher@denverpost.com
