Durango’s downtown businesses had a record-setting Christmas season.
The Central Business District set a new monthly record for sales and saw a 2 percent increase in sales tax collections, said Tim Walsworth, executive director of the Business Improvement District.
In December, across the city, general sales tax collections were up to $1.8 million about 4.7 percent higher than the December 2015, according to city records.
Downtown Durango also set a new annual record with more than $250 million in sales, an increase of 1.8 percent compared with 2015. For the city as a whole, sales tax collections increased 2.6 percent from $22.4 million in 2015 to $22.9 million in 2016, Walsworth said in an email.
While downtown sales set records, growth slowed in 2016 compared with some previous years. In 2015, downtown saw a 6.7 percent year-over-year increase in sales. In addition, the entire city saw an increase of 5.8 percent, Walsworth said.
A sampling of eight cities in Colorado showed a similar trend. Seven of the eight cities saw a slowdown in sales tax growth in 2016.
“It appears this slowdown occurred all across the state,” he said.
After a year of mixed economic indicators and some declines in monthly sales tax collections, experts are cautiously optimistic about 2017 – even contemplating a possible turn around in the region’s hard-hit oil and gas sector.
The slowdown in oil and gas prices, blamed for some of the economic lag regionally, may have hit bottom, said Roger Zalneraitis, the executive director of the La Plata County Economic Development Alliance
But it is likely to be a slow climb for prices, he said.
“We are not going to see the heyday we saw in the mid-2000s,” he said.
In January, natural gas prices in the San Juan Basin were up to $3.46 per thousand cubic feet up from $2.05 in January 2016, according to data provided by the La Plata County Energy Council.
“I think we’ll see some production increase this year,” said Christi Zeller, executive director of the council.
She is also seeing employment in the oil and gas industry stabilize.
John Feistner, president of Tegre Corp. in Durango, which provides engineering and design, environmental compliance and other services for oil and gas companies, has not seen a noticeable increase in activity yet.
“Cautiously optimistic is the term I would use to best describe future drilling in the San Juan Basin. ... With gas prices continuing to climb we may see an increase in the basin in the medium term,” he said, in an email.
He said natural gas production companies that remain in the San Juan Basin have been diligent about lowering overhead costs and increasing efficiencies, and they will start to see an increase in profitability as prices rise, he said.
While oil and gas was down, other parts of the regional economy had a good year in 2016. Manufacturing and construction had a strong first half of the year. Tourism was also strong with lodgers taxes seeing gains, Zalneraitis said.
One concerning trend within the La Plata County is the labor force, which is not seeing healthy growth.
The number of people working in La Plata County declined from 30,520 people in December 2015 to 29,699 in December 2016, data compiled by the Economic Alliance showed.
The numbers since 2011 show that job growth is healthy, workers are just not moving to the county.
Between 2011 to 2015, 3,000 jobs have been added in the county according to the Bureau of Economic Analysis.
The data show that 1,575 people filled those jobs, but did not move to the county. There were 1,225 people who were formerly unemployed who filled positions and 200 people who moved to the county, Zalneraitis said.
This can hurt the tax base and business productivity when people can’t come into work because they are snowed-in, he said.
“If people aren’t living here, they aren’t going to shop here,” he said.
If residents can’t support the tax base, the quality of services provided by local government for business declines.
If the problem persists, business will move to where their employees live, he said.
Despite this trend, Zalneraitis is cautiously optimistic and predicts economic growth for the coming year. In the long term, he is bullish about the way the economy is evolving.
“That Fort Lewis is bringing the computer engineering program back shows great promise for our community,” he said.
The new computer engineering program at Fort Lewis College will provide new pool of young employees for technology companies in town, and that could provide a small boost.
The area could also attract more solar energy companies in the next five to 10 years because the quality of life is an attraction and an existing reservoir of local expertise.
“We’ve seen some local solar and now national solar companies emerge with headquarter operations here – specifically CalCom Solar and Konisto,” he said.
mshinn@durangoherald.com
This article has been updated to correct the 2016 annual sales for Downtown Durango. The total was $250 million.
