JOAN BARRON Star-Tribune staff writer | Posted: Sunday, November 16, 2008 12:00 am
CHEYENNE - Is the magic seeping out of the Magic City of the Plains?
In recent years, Cheyenne has been the envy of other Wyoming cities outside the mineral zone as it blossomed with new businesses such as the Wal-Mart distribution center.
And then a few weeks ago, outgoing Cheyenne Mayor Jack Spiker imposed a city government freeze on new hires and urged restraint on travel and other spending. This was an ominous development, given the national economic crisis.
Some said it was a sign that the recession has come to Wyoming, that the state's energy economy was no longer a bulwark against national trends.
The impetus for the Cheyenne freeze is a flat or near flat stream of revenue from sales and use taxes, the lifeblood of municipalities.
City Treasurer Barb Dorr said the city's budget was built on an anticipated increase in sales taxes. But the income instead fell about $300,000 short of the amount budgeted.
Meanwhile, the city's motor vehicle tax collections are down from last year.
And, although the Legislature authorized a backfill to local governments to replace sales taxes from the exemption on groceries, it doesn't quite make up for the total loss.
City employees will still get a 3 percent pay raise in January, as authorized earlier, in addition to the 3 percent hike they received in July.
Dorr and others speculate that people are getting cautious about spending, particularly on big-ticket items.
George Parks, director of the Wyoming Association of Municipalities, said that the numbers show that most municipalities in the counties are either up or break even on sales taxes. The exceptions are Platte and Washakie counties.
"I think a lot of cities and towns are worried about it, that they anticipate that in the next few months it may get significantly worse," Parks said.
"Of course that's our biggest source of revenue," he added. "I think there's plenty of reason to be concerned that the national economy rubs off here."
Sales taxes held up in the fiscal year that ended July 1, 2008, registering a 5.9 percent increase, according to the state's economic analysis division.
The growth was down from the 9.3 percent rate in fiscal year 2007.
"It was the slowest expansion since 2003," the division reported.
The financial experts that make up the Consensus Revenue Estimating Group said in their October report that they were comfortable with the risk associated with projections for sales tax, investment income and miscellaneous revenue sources. The group, which hews to the conservative side, estimated a 7.5 percent increase in sales and use taxes for fiscal year 2009.
Dick O'Gara, the director of the Wyoming Center for Business and Economic Analysis in Cheyenne, meanwhile, said he hasn't seen a dip in consumer spending here.
"I don't think we've seen the consumers rein in spending yet in Laramie County, although it may occur," O'Gara said.
The reason for the downturn in sales tax dollars for Cheyenne, he said, is construction. New single family construction in Cheyenne is down 35 percent from last year, while new commercial construction is off 40 percent.
"We are talking about millions of dollars," O'Gara said.
The housing contractors overbuilt and commercial construction has been hot in recent years. People expected unending growth in Cheyenne.
"That's not how things work. If you get above a historical average, it will break," he said.
O'Gara believes Wyoming will start to see an impact from the national recession in late 2009.
"Nothing out there suggests a rebound," he added.
Contact Joan Barron at joan.barron@trib.com or by phone at 307-632-1244.