Park City forecasts yearlong slog toward economic normalcy, starting with an awful summer
July could be an awful month for the Park City economy.
And August might only be marginally better, according to projections drafted by City Hall as officials continue to consider the impacts of the spread of the novel coronavirus on business in Park City.
City Hall has produced a month-by-month sales-tax forecast for the municipal government’s 2021 fiscal year, starting at the beginning of July and running until the end of June of 2021. It shows officials anticipate a yearlong slog toward normalcy but, even by June of 2021, the numbers will not have returned to 100% of what would have been expected without the pandemic.
Staffers created the forecast, which was presented to Mayor Andy Beerman and the Park City Council at a recent meeting, as part of the preparations for what are expected to be the most difficult budget talks since the depths of the recession a decade ago.
The forecast starts with what is projected to be a miserable July for sales in Park City. The sales-tax numbers that month are assumed to be 36% of a normal year. The next month is projected to climb to 47% of a normal year.
The July and August projections could be disheartening to a business community that has suffered terribly since mid-March amid government-mandated shutdowns in the final weeks of the ski season. There was concern in April, and there is in May as well, but those months are typically the slowest of the year for sales as Park City enters the post-ski season lull.
The economy typically starts to accelerate again by the middle of June, and July and August are usually strong months, with Park City hosting a series of festivals, sporting events and cultural gatherings. Some initially saw a possibility that summer tourism would be solid, but it is becoming less likely that will be the case amid cancellations like the Tour of Utah bicycling race and the weekly Park Silly Sunday Market.
The projection anticipates the sales taxes will top 50% of a normal year starting in September, when the figure could reach 53%. The numbers from there slowly move upward.
The key months of the ski season, the normally lucrative stretch from December until the end of March, are projected to be in the 70% range of a normal year, starting with 71% in December and ending at 75% in March.
By the spring and early summer of 2021, the numbers begin to approach a normal year, finishing at 95% in June of 2021.
“Any additional/significant shocks to these months would have a further material impact on sales tax estimates,” the forecast acknowledges.
The forecast anticipates a 31% drop for the entire 2021 fiscal year from what would have been expected.
The sales-tax projections are crucial for City Hall as well as the wider community since sales tax is a critical revenue stream for the municipal government itself and is essentially an indicator of the health of the economy, as sales taxes rise and fall based on the amount of commerce underway. City Hall uses the numbers as officials prepare a budget for the fiscal year while the private sector could consider the figures as it prepares forecasts for product buying and staffing levels.
There had been hope the downturn would be contained to the spring, leaving the economic numbers in the summer and the 2020-2021 ski season largely intact. That hope, though, has largely dissipated with the event cancellations in the summer and uncertainty about the national economy and the spread of the sickness into the next ski season.
The mayor and City Council are expected to spend extensive time in the next six weeks on financial matters as they prepare to adopt the budget in June. They must address a projected revenue shortfall in the current fiscal year as well as craft a budget for the 12 months starting on July 1. It is unclear how important the sales-tax forecast will be to the overall discussions.
One member of the City Council, Steve Joyce, at the recent meeting wondered whether the sales-tax projections are optimistic. The elected officials did not hold an extensive discussion about the projections, though.
Joyce in a later interview said there is a series of variables that will impact the sales-tax numbers over the next fiscal year. They include the possibility of another coronavirus outbreak next winter, the comfort level of travelers in taking a trip to Park City and the willingness of people to eat at restaurants, whether they are outside in the summer or inside in the winter. He described unique qualities, though, to a mountain resort, such as the main attraction of Park City being the outdoors and, in the ski season, people dressing protectively for the weather.
Joyce acknowledged the projections are “looking at a crystal ball.” He said he would be pleased if the actual sales-tax numbers match the projections prepared by City Hall. That would have meant Park City “wound everything back up,” he said.
“If we hit the numbers we’re forecasting … I’ll be happy,” Joyce said.
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Park City within weeks intends to file an application involving the development of an arts and culture district along Bonanza Drive and Kearns Boulevard.