Early returns portend complete collapse of local economy

City Clerk Chantell Steiner provided the City Council with a report on the cities tax collections through April. Tax receipts from the state are received two months following the actual collections. This means that taxes received in June were actually collected in April. It also means that the January, February and March receipts were actually for November and December of 2019 and January of 2020.  

What is clear is that the Covid-19 shutdown has had a dramatic impact on city funds and to the city of Leavenworth’s economy. This should not be a surprise since city revenues are heavily dependent on retail sales tax and lodging tax. Both of these taxes come primarily from tourists.

The actual tax receipts for May and June were down 40 percent or $93,726. Th city is projecting that by the end of 2020 city retail tax receipts will be down $402,000 or 22 percent. 

Lodging tax receipts were even worse with April collections down 97 percent or $127,149. While a good portion of the programs that rely on that money can be deferred; a substantial portion is committed to meet bonding obligations on the Festhalle and Amtrak station.  

The projected lodging tax collections for the remainder of the year indicate the city expects revenues to be down by over one million dollars. This will require a large transfer of funds from the cities reserve to meet bond obligations. Questions to the city regarding the expected transfer remain unanswered at press time.

Looking again at the retail sales tax we also can get a measure of the impact on the local economy. Tax collections represent 1.05 percent of taxable retail sales. This means last year our local retail sales in Leavenworth were approximately $123.8 million. If the city is correct and we are able to maintain the March and April results for the balance of the year. The annual taxable retail sales will be just over $97 million. A decline of just under $27 million. 

When the city shut down pool operations in June they did not furlough or lay off the pool employees. They found other work for them downtown. At this point the city is not talking about cutting operating costs or deferring work on projects other than the parking meter installation. That could change as the Councils Annual Retreat is scheduled for Friday, Jul 31 via zoom. 

With nearly a $100 million loss in retail sales activity that is currently projected for 2020. There will undoubtedly be a number of small businesses that will not be able to reopen.