The city of Grand Junction ended its fiscal year with its combined sales and use tax down less than 2% compared to 2019.
In the 2020 fiscal year the city collected $57.1 million in combined sales and use tax, which is around $1.1 million less than 2019 and about $600,000 more than 2018. Collections were around $2.4 million below what had been projected prior to the COVID-19 pandemic.
During the stay-at-home period in April, the city saw a 25% drop in sales and use tax and at the time officials worried the rest of the year could be more of the same. However, loosened COVID-19 restrictions in later months and efforts like Mesa County’s Five Star program to keep businesses open limited the economic impact of the pandemic, City Manager Greg Caton said.
“When we were doing those early projections, those were our worst months when we were in stay-at home and did not know how long that environment would continue,” Caton said. “We really did predict a worst-case scenario. Fortunately we did come far far away from a worst case scenario.”
The last month of sales and use tax was collected in December and was based on sales made in November. Those sales were down about 1.7% or $77,000. Finance Director Jodi Welch said the rise in COVID-19 cases at that time likely had an impact on economic activity. Even with a soft final month of the year, the city was able to close out 2020 with revenues exceeding expenditures, she said. The city expects to add between $4 million and $4.4 million to its fund balance.
“What we did in the beginning when we reacted to the pandemic very early was we reduced our expense budget significantly to be in line with what we thought was the worst-case scenario of what our revenue reductions would be,” Welch said. “As the revenues were getting better, we didn’t correspondingly spend more.”
Caton said he thought Grand Junction being able to remain open with fewer restrictions than many other parts of the state contributed to the better than expected tax collections. He said the low COVID-19 numbers over the summer and the ability to spread out in the outdoors contributed positively to the area’s economic activity.
“Many other communities really are more closed,” Caton said. “So that has an impact. When you are out and about in our community, it’s very different here. We’re more open for business here, if you will, than many other communities across the state.”
Grand Junction did follow state and national trends in some ways with the construction industry, including retail construction stores faring well economically, Welch said. Big box stores also did well following the stay-at-home period and liquor stores were another bright spot. Lodging and restaurants were among the hardest industries hit in 2020, Welch said.
Looking ahead to 2021, Caton said they will keep a close eye on the January sales and use tax collections. Those collections are from December sales and are one of the biggest months of the year for the city.
“We’ve been extremely cautious in our expenditures for the first 40 days until we receive that first report,” Caton said. “Fortunately, a year ago that first report was very positive and that actually served us quite well for the remaining of the fiscal year 2020.”
The first half of 2021 is expected to be similar to what the city has seen for most of 2020, Caton said. The key to returning to a more normal economic environment is having a vaccine widely available for the general public, Caton said.
“We could see, I would call it a revival of economic activity in early summer,” Caton said.
“I think we really saw that throughout the state post stay at home where people were ready to get out.”
Caton said the outdoor amenities in the area and the ability for people to spread out in the Grand Valley will continue to be advantages for the local economy into 2021.
“I think given the COVID environment more people were very sensitive to that confined space and we don’t have that,” Caton said. “That’s one of the beauties here and I think that served us well in 2020 and quite frankly will serve us well in 2021 and beyond.”