Vail Town Council to review budget indicating deeper phases of its recession plan

The Vail Town Council on Tuesday will review budget projections showing the town may have to enter into deeper phases of its recession plan. Here’s the town’s press release on that meeting:

The Vail Town Council will review updated budget projections, recovery plans and other related matters during its Tuesday, May 5 evening meeting as the COVID-19 pandemic continues to impact the town’s operations and overall economy. The discussion is listed as item 4.3 on the evening meeting agenda which begins at 6 p.m. The meeting will be live streamed at www.highfivemedia.org/live-five. Public comment will be taken in advance at publicinput.vailtowncouncil@vailgov.com.

During the meeting, Town Manager Scott Robson and Finance Director Kathleen Halloran will lead a discussion on the latest information from public health officials as well as updated economic indicators which show the town moving into deeper phases of its recession plan with estimated annual revenue decreases of up to 26% from the prior year, mostly from sales tax collections.

At its April 7 meeting, the Town Council approved a reduction in revenues of $10 million, or 13% of total revenues for the town, as well as corresponding cuts in expenses.

Included in the revised budget projections to be presented Tuesday is the performance of sales tax collections for the month of March, in which $2.2 million was collected, a decrease of 46% from the prior year, but more favorable than the 75% previously estimated. Construction activity remains relatively strong around Vail throughout the COVID-19 crisis; however, estimated revenue for permits and plan check fees have been reduced by 18% while Real Estate Transfer Tax collections were already budgeted at a 13% decrease from the prior year.

Also of note, the town was recently awarded $1.35 million in federal CARES funding for transit operations. These funds are being used to help the town cover costs associated with interruption of bus service and efforts to bring the service back.

Looking ahead to summer, the public health crisis will have a significant impact on Vail’s event schedule which traditionally draws large summer visitation and economic vitality, according to a staff analysis. Public health orders currently allow for groups of 10, with the next phase permitting groups of 25-50 in the next 4 to 8 weeks, followed by a potential to have groups of 250 in late summer. Other uncertainties such as the status of air travel, consumer behavior and the potential for a resurgence of the COVID-19 virus further complicate the accuracy of revenue projections.

The updated revenue projections fall into the following two phases of the town’s recession plan:

Major Recession Phase – The town’s revenues are projected at $61.9 million, a decrease of $18 million, or 22% from prior year. Compared to budget, it is a decrease of $12 million, or 16%. A majority of the decrease relates to sales tax, with collections estimated at $19.2 million, a decrease of $10.1 million, or 35% from 2019. Other major revenue sources such as lift tax, parking, construction fees and intergovernmental revenue (County sales tax, grants and other shared taxes) have also decreased by double digits. 

Crisis Recession Phase – In this phase the town’s revenues would be projected at $58.9 million, a decrease of $21 million, or 26% from prior year. Compared to budget, it is a decrease of $15 million, or 20%.  A majority of the decrease relates to sales tax, with collections estimated at $16.8 million, a 43% drop from 2019. If this phase is implemented, additional reductions are also assumed in the other major revenue categories. 

Town staff will continue to monitor impacts and adjust expenses accordingly, according to Robson. Summer services will be reduced depending on anticipated visitation levels as public health orders are updated over time. Special event activities, for example, are being re-imagined, including the annual Vail America Days celebration over July 4^th.

Tuesday’s update will also include an overview by Robson of town-initiated recovery efforts. This includes distribution of Vail Community Relief Funds for food, rental relief and medical and behavioral health, as well as staff participation on regional economic recovery task forces. The town has also created a Vail-based economic recovery team comprised of members of the Vail Economic Advisory Council that will address Vail-specific efforts to reboot the economy. The team is integrated with the regional and county efforts and will hold its first meeting on Tuesday, May 5.

To review the staff memo and other agenda items for the May 5 meeting, visit www.vailgov.com/agendas.