Park City projections point toward an economic drubbing during ski season
City Hall has crafted projections showing officials anticipate sales-tax numbers over the 12-month period that started in July will suffer a drubbing as the economic impacts of the novel coronavirus are expected to stretch into at least next summer.
The numbers are especially dire for the crucial months of the ski season, meaning the municipal government has an expectation tourism will drop sharply in the period between December and March. City Hall staffers presented the numbers to Mayor Andy Beerman and the Park City Council at a meeting on Tuesday that addressed the continuing talks about the municipal budget for the 2021 fiscal year, which started in July and runs through June 30. The budget talks in the spring and early summer were the most difficult since the depths of the recession a decade ago, and officials pledged to return to the talks as more was learned about the effects the spread of the sickness would have on City Hall finances.
The forecasts for the core months of the ski season call for sales taxes to drop by 55% in December from what would otherwise be expected if the conditions were normal. The drop is projected to be 45% in January, 47% in February and 54% in March. The numbers in the other months of the fiscal year are poor as well, ranging from a drop of 14% in November, the best month, to a 49% cut in April.
Throughout the 2021 fiscal year, the budget staffers project, sales taxes will drop by 43% from revenues that would have been forecast under normal circumstances, a slightly downward revision from an earlier projection in the spring. The shortfall in sales taxes is projected to total $6.5 million in the municipal government’s General Fund, where day-to-day expenses are drawn from, in the 2021 fiscal year.
“It’s essentially saying we’re expecting pain in the winter,” Erik Daenitz, a senior financial data analyst and key budget staffer at City Hall, told the elected officials at the meeting.
Sales taxes are critical to City Hall and stand with property taxes as, by a wide margin, the two most important municipal revenue streams. Sales taxes, though, are seen as far more volatile than property taxes and depend on variables like the national economy and snow conditions.
The projections are also important to the wider community, especially the owners of businesses of all sizes. Businesses across sectors that are reliant at some level on the ski season are almost certainly readying staffing and inventory budgets, with hiring and stocking goods usually underway, at the latest, by the middle of October with the ski season scheduled to open the next month. It is not clear whether the private sector projections match the concern in the City Hall numbers, but the municipal figures could provide at least some guidance to the key industries like lodging, restaurant and transportation. Main Street businesses, too, could see the projections as helpful as they prepare for the ski season.
Park City is preparing for the first full ski season since the spread of the novel coronavirus after the most recent ski season ended early as a result of the sickness. The 2019-2020 ski season suddenly was halted in the middle of March with health orders and what was essentially a shutdown of travel. The timing of the mid-March closures, though, was seen as somewhat fortuitous for the community since most of the ski season’s business had already been transacted.
The upcoming ski season is expected to be challenging with the spread of the sickness continuing and ongoing worries about the economy. The owners of Park City Mountain Resort and Deer Valley Resort have outlined blueprints for a socially distanced ski season, but it is not clear what sort of reaction the plans will elicit, especially from skiers from outside of Utah who tend to spend more on a daily basis than those from inside the state. The Sundance Film Festival, meanwhile, which is normally an especially lucrative stretch of the winter, will be greatly scaled back.
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The Park City lodging industry in recent weeks experienced an uptick in projected occupancy numbers during the dates of the Sundance Film Festival, but the figures remain depressed from a typical year during the largest special event on the city’s calendar.