2022 was a strong year for city revenue. Inflation could change things for Greeley in 2023
By Kelly Ragan
Money talks, and the City of Greeley says things are looking good – for now.
While 2022 proved to be a strong year, according to the city, inflation could change the equation in the second half of 2023 and beyond.
In 2022, growth in city revenue was up across the board.
The breakdown of tax revenue, residential utility rate revenue and additional comparatives looked like this:
Tax revenue
Sales tax: Up 11.4% from $76,246,237 to $84,901,070
Property tax: Up 3% from $17,423,178 to $17,941,817
Use tax: Up 38.4% from $13,854,831 to $19,176,629
Food tax: Up 14.3% from $9,696,506 to $11,087,455
Lodging tax: Up 3.7% from $620,002 to $642,891
Residential utility rate revenue
Residential water rates: Up 8.2% from $25,156,154 to $27,214,777
Residential sewer rates: Up 17.4% from $8,378,501 to $9,838,766
Residential stormwater rates: Up 14.4% from $7,651,602 to $8,753,492
Back in December, the city voted to increase stormwater and sewer rates on Jan. 1.
Additional comparatives
Development impact fees: Up 75.8% from $17,852,705 to $31,379,514
Oil royalties: Up 206.8% from $2,588,936 to $7,942,235
Building permits: Up 70.6% from $2,003,116 to $3,417,185
Some of the growth in 2022, according to the city, was driven by one-time revenue (think American Rescue Plan Act dollars) and pent-up shopping demand coming out of the COVID-19 pandemic.
John Karner, Greeley’s finance director, said sales tax makes up about 65% of the city’s revenue.
“We watch this very heavily each year, it’s an indicator of economic activity,” he said.
Some of the largest drivers of sales tax revenue for the city included motor vehicle and parts dealers, general merchandise stores, building material, garden equipment and supplies dealers, limited-service restaurants (think restaurants where you pay first, then eat) and liquor stores, online shopping, and full-service restaurants.
Two categories, clothing and accessory stores as well as sporting, hobby, book and music stores dipped slightly in sales tax revenue from 2021.
Financial outlook for 2023
Early 2023 numbers show growth in sales and use tax – though the growth has slowed compared to the boom Greeley saw in 2022. According to city documents, while 2022 saw a 17% increase in the first quarter, 2023 has seen growth of about 5.6% for the first quarter.
City documents cite inflation as the main driver of slowed growth, “forcing citizens and city to adjust spending plans.”
According to the city, this means it will focus on managing one-time revenues wisely, making strategic long-term investments, allocating funds to sustainable city council priorities and expanding the city’s forecasting and long-term financial planning capabilities.
What does this mean for the future budget?
Robert Miller, the city’s treasurer and interim budget and compliance manager, said it’s too soon to say for sure.
As it stands, the challenges the city will have to face with the new budget include higher operating costs, economic uncertainty, and increases to legal obligations and partnership agreements, Miller said.
The tailwinds include potential growth from new residential and commercial developments, increases to property valuations, and one-time funds remaining from the American Rescue Plan Act.
“We’re currently estimating about a 20% increase in property tax valuations in Weld County,” Miller said. “That will help offset some of those headwinds.”
However, the 2024 budget process will reflect council’s strategic focus areas, which include: business growth, community vitality, high-performance government, housing for all, infrastructure and mobility, quality of life, and safe and secure communities.
Budget prep for 2024 will take place from June through August, with the first draft proposal making its way to council in September. The first public hearing on the budget is set for Oct. 3.
While we don’t yet know many details about the 2024 budget, we do know various departments are asking for cash.
The municipal court and the city attorney’s office, for example, are asking for several items.
The municipal court is asking for $221,737 in additional funding in 2024. The money would go toward:
One new full-time deputy court administrator. The position is expected to cost the city $119,817 for the salary and various position-related costs, such as providing a computer, necessary software, phone, memberships and travel. The municipal court is willing to offset that cost by using $56,741 set aside for a part-time court marshal vacancy toward the position.
Court interpreter hourly rate increase from $35/hour to $45/hour
X-ray machine replacement with a replacement cost of $50,000 and maintenance costs estimated to be around $50,000, though city officials noted the maintenance cost could be lower.
The city attorney’s office is asking the city for $1.14 million in additional funding in 2024.
Doug Marek, city attorney, spoke at the meeting.
“Requests for legal assistance has dramatically increased,” Marek said. “In the first quarter, it increased by 92% and the second quarter, it’s trending about 85%.”
The money would go toward:
Three new full-time senior attorney positions, costing the city an expected $634,428 between the three salaries, computer and software, travel costs, etc.
One senior paralegal position, set to cost the city $126,257 including salary and various position-related expenses.
One legal assistant position, set to cost the city $92,976 including salary and various position-related expenses.
Part-time law student interns and law clerks, set to cost the city $83,700.
Specialized outside legal counsel, set to cost $68,000.
Legal education, training and staff development, set to cost $57,500.
Recruitment, applicant assessment, professional coaching and team-building set to cost $78,000.
Councilmember Johnny Olson requested additional information on how the number of attorneys employed by Greeley compares to comparable communities.