Revenues are up, unemployment is down and consumer spending has surpassed pre-pandemic levels, signaling a strong economic recovery is underway in Denver. In April, the Department of Finance provided an economic update with preliminary year-end numbers for 2021 and an overview of early 2023 budget projections as the 2023 budget process kicks off.
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“Thanks to our steady fiscal management, Denver not only weathered the pandemic, we’ve leaned into our recovery by investing where it matters the most – in our people, our communities and our economy – and we’re already seeing the impact,” Mayor Michael B. Hancock said. “We’re going to keep this momentum going, and with our recovery plan and the resiliency of the people of Denver, we’ll comeback better and stronger than before.”
While Denver’s 2021 revenue numbers won’t be finalized until mid-May, unaudited preliminary year-end results show 2021 revenues outperforming projections.
2021 unaudited preliminary year-end results:
• General Fund Performance: The city’s general fund reflected year-over-year revenue growth of 12% in 2021. General Fund revenues surpassed 2019’s pre-pandemic levels by 1.7%.
• Sales & Use Taxes: Driven by strong recovery in the restaurant sector, Denver’s Sales & Use taxes rebounded strongly in 2021, up 21.6% over 2020 revenues. The city brought in approximately $720 million in sales and use tax revenue in 2021, surpassing the city’s 2019 sales and use tax revenue by more than $60 million.
• Property Taxes: Property taxes remained steady, reflecting the 2019 assessed property values.
• Lodgers Tax: In the Tourism and Hospitality sector, 2021 occupancy rates in Denver-area lodging facilities averaged 58%, up from 42% in 2020 but still down from 74% in 2019. Room rates in 2021 were up 20%.
2022 Initial revenue projections include:
• General Fund Performance: 2022 revenues are expected to grow by 7% over the original projection.
• Sales & Use Taxes: Continued strong recovery resulting in revenue growth of 6.6%.
• Property Taxes: A slight increase in revenue due to moderate growth in the 2021 assessed property values.
• Lodgers Tax: Continued recovery in leisure, business and group travel
The positive signs of economic recovery are challenged by vulnerabilities relating to geopolitics, the available labor pool, affordable housing stock, continued uncertainty about the pandemic, inflation and inequality in the recovery. Posivie signs include:
• The Leeds Business Confidence Index remained at 53.9% in January 2022, above the baseline for a stable or improving economy.
• The University of Michigan Consumer Confidence Index reached 62.8% in Jan. 2022, the lowest level in the last five years.
• Housing prices remain high in Metro Denver with the median single family home selling for $720,000 in 2021.
• The most recent Metro Denver Small Business Pulse Survey shows 35% of small businesses are facing hiring challenges, and 40% are facing supply chain and increasing cost demands.
Over the summer, Mayor Hancock will build his 2023 budget proposal. The budget is expected to reflect the values of equity and financial stability, and priorities of:
• Rebuilding an inclusive, sustainable economy that is accessible to all Denver residents;
• Supporting people along the housing spectrum, from unhoused people to first-time buyers; and
• Promoting safety and wellbeing for people and neighborhoods
According to the Charter, the Mayor will deliver his proposed budget to the City Council and community by Sept. 15, 2022.
In addition to the city’s annual budget process, the Mayor will join the Department of Finance to ask Denver residents what outcomes they want to prioritize for investment from the city’s second allocation of $154 million in American Rescue Plan Act (ARPA) State and Local Fiscal Recovery funds.