With coronavirus cases surging and Denver facing new levels of public health restrictions — including bans on indoor dining — city officials are bracing for even greater revenue losses than the $220 million estimated this year and $190 million anticipated in 2021.
“The impacts of this resurgence of COVID cases are likely to impact both our 2020 and our 2021 revenue estimates,” Kiki Turner, spokeswoman for Denver’s Department of Finance, told Colorado Politics on Thursday. “We will be monitoring the impact of the new public health measures that will be put in place to slow the spread of COVID. Once we have some economic data that can inform the revenue impact we may experience, we will consider revising our revenue estimates.”
To help stem a bleeding economy, Mayor Michael Hancock's administration called for city furlough days both this year and next and required its departments and agencies to tighten their purse strings. City leaders also accelerated the Elevate Denver Bond Program, which will infuse $170 million into the coronavirus-addled economy with the goal of creating jobs and boosting consumer spending in the region.
It’s unclear, however, what additional steps the city will take next as cases of the virus continue to explode across the state.
As for timing next steps, the city’s financial experts are in a “difficult position,” Turner said, because sales tax revenues “always lag” about two months behind. After sales taxes are collected through November, for example, businesses will have one month to remit those taxes to the city, meaning that the city won’t be able to process them until January.
“With the restrictions going into effect at the end of this month,” Turner said, “sales tax information from November and December will be crucial for us.”
The pandemic has decimated consumer spending at restaurants and bars, the single largest contributor to Denver’s sales and use tax revenue, the finance department estimates. Sales tax is a key indicator city financial experts look towards, but they also monitor a variety of other regional economic indicators as well “to paint as complete a picture as we can,” Turner said, before making any revisions.
Despite Denver recently maintaining “strong” creditworthiness among the world’s three largest bond rating agencies, Mayor Michael Hancock continues to call on the federal government to deliver a new round of stimulus funding. Without it, city and state leaders are left to fend for themselves, forced to find a “balance" between protecting public health and preventing economic disaster.
Gov. Jared Polis announced that, because of inaction from Congress, he will call the legislature back for a special session to pass a $220 million relief package to stimulate the state’s economy. The special session will take place ahead of lawmakers’ regular session that kicks off Jan. 13, 2021. The session is most likely to be scheduled just after Thanksgiving, although logistical details still being worked out that could delay the meeting by a few weeks.
The stimulus package will include tax relief for restaurants and bars withering under COVID-19 capacity limits; a second piece will deal with child care; a third is focused on rental assistance for both tenants and landlords; and a fourth component, about $20 million, will help K-12 students with broadband access.
“Extraordinary times call for extraordinary action,” the governor said.