Tax revenues are up in Littleton from the past year, a sign that the city is continuing to recover economically from COVID-19.
According to a recent report, Sales and Use tax revenues, which include taxes on retail, food and motor vehicle registrations, were 20% higher this December than in December 2020, when many city businesses were forced to shut or reduce hours.
“Almost everybody’s business was up in 2021 over 2020,” said Pat Dunahay, co-president of the Littleton Business Chamber.
City Manager Mark Relph said the increase was not a complete surprise, though December’s numbers were slightly higher than city staff had expected.
“Incrementally, there was a little bit more there than was anticipated,” Relph said. “Obviously, it’s a blessing.”
As the main source for the city’s general fund, sales and use tax revenues are the key to paying for vital daily operations such as the police force, public works and staffing for the Bemis Library and Littleton Museum.
The 20% increase in December helped boost the city’s surplus of unexpected revenue to $2.4 million this past year on top of the $39.15 million that also came in. Some of the extra money has led to more breathing room for staff, who proposed several amendments before council to the 2022 budget during a Jan. 25 meeting.
That includes hiring a public information officer for the city’s police department, a long-sought position among staff. Other proposals include restoring the library and museum to pre-pandemic level staffing, modernizing and reclassifying the public works department and hiring a cybersecurity analyst and regional transportation planner.
That will add a total of $755,979 to the city’s 2022 budget, which will have to be voted on and approved by council.
But even with more money on hand, Relph urged caution in spending as the city, and the rest of the country, continues to weather economic uncertainty.
“If there’s anything I would tell our community … we have to be very careful, very pragmatic when we approach budgeting,” he said. “While we have very good news now, we have to be very careful about what this means for the next several months … because we don’t know where the economy is going.”
The arrival of the highly-contagious Omicron variant in the U.S. in late November upended the course of the pandemic and proved to be yet another warning sign for how uncertain the future will be.
“We were concerned, certainly in December, when Omicron was peaking, as to what the impact was going to be on our restaurants and small businesses,” Relph said.
But with December’s strong revenue numbers, the variant’s effects on economic activity in Littleton appeared to have been much less severe than previous waves of COVID.
Dunahay said the city has been able to profit both from people going out and those still staying home. More people are shopping and dining out, Dunahay said, and for those who aren’t they’re ordering in and shopping online, which is also generating tax revenue.
But inflation, which Relph said is already being felt throughout Littleton, remains another wild card in the city’s recovery and future planning.
Dunuhay said his business, PDA Roadgear, a car audio and accessory shop, has had to rise prices as manufacturing costs increase and nearby supply dwindles, leading him to fly in products as needed.
“The increase in prices has been passed on to the consumer,” he said, adding that he hopes it will subside.
Another major area where inflation could be felt is in the city’s general use tax, which collects revenues on materials businesses purchase for construction and renovation projects. With the cost of such materials rising, it could affect how often businesses purchase and in turn lead to dwindling tax revenues.
This had already been a problem even prior to inflation, with the city’s general use tax revenues down 2% this year and 32% in 2020. It led to the possibility of the city facing a financial crisis as the revenue supports the city’s General Projects Fund, which pays for infrastructure projects.
The funds’ account was projected to hit $0 by 2025 leading the city to ask voters for a 0.75% raise in its sales tax which they approved in the November election. Now, for the first time, General Projects Fund revenues will come from sales tax as well as general use tax.
And the “great resignation,” as it has become colloquially known, has forced the city to invest in more competitive wages and hiring practices, such as signing bonuses, in order to retain and attract staff.
With employees across the country exhausted from the pandemic and wages that don’t meet the cost of living, more are leaving their jobs and fewer are applying for new ones. It’s a situation the city has never faced before.
“If we advertised for a public works position (before COVID), we had all sorts of applications and we could have our pick of whoever we wanted,” Relph said. “We can’t do that now, we don’t have the applications.”
As signs continue to point to a steady recovery, Relph said it is important that the city use caution as it moves forward with budget adjustments.
“We have to be very careful about overextending ourselves,” he said.
But Dunuhay said he remains optimistic that as metro areas around Littleton grow, the city will continue to thrive as it emerges from COVID.
“I just don’t see where the city is going to not prosper, I really think it’s a nice place to do business,” he said.