City Manager's Blog

Greeley Gov Economic Update

I’m often asked by City employees, Chamber of Commerce leaders and business owners in the region, “How’s Greeley doing?”  And most often what they really want to know is, “How is Greeley’s economy faring during the oil and gas downturn.  That’s a very interesting question to which there’s no simple answer.  But we can put the current state of affairs in perspective with some details about what has happened so far in 2016.

Sales & General Use Taxes.  Indicators in this area include sales taxes collected by restaurants, motor vehicle parts stores, general merchandise stores and more.  In the first couple months of this year we are seeing lower revenue than in 2015.  Although this is disappointing, it is not unexpected given that 2015 was an exceptional year and the significant slow-down in oil and gas activity has slowed our revenue growth.  With fewer oil and gas companies and fewer employees, business and personal purchases are down. 

Franchise Fees.  This is a good news/bad news story.  The good news is that prices for electricity and natural gas are lower, as is gasoline for vehicles, which results in cost savings for residents, businesses and for the City.  However, that also results in lower franchise fees and taxes.  The warmer than normal weather in January and February also impacted this revenue.  Total 2016 revenue in this category could be $1.5 million less than estimated. 

Auto Use Tax.  Sales tax in this category looks healthy with the real possibility that overall for the year we may see tax revenue from the sale of vehicles come in ahead of estimates.

Building Activity.  When compared to 2015, we are seeing a decrease.  While there is still a healthy amount of activity, there is less than last year.  For example, there were 105 single family permits issued through the end of February in 2015, while there were 78 issued in the same period this year.

Property Taxes.  We expect revenue to be $500,000 more than anticipated; however, that revenue will likely be lower in future years.

Severance Taxes.  When oil was priced near $100 per barrel, Greeley and Weld County saw a considerable amount of severance tax income.  Now that oil is hovering around $35 per barrel and natural gas prices are lower, the severance tax revenue has dropped. 

New & Renewed Taxes.  In November, voters renewed the Sales Tax on Food and approved the Keep Greeley Moving sales tax for roads.  Both taxes are performing well so far this year.  

City government budgeting is always an interesting juggling act.  At this point, it looks like we may come up short for the year in some categories and above estimates in others.  We are not anticipating City budget cuts in 2016, rather we’re taking a stance of optimistic prudence.  We’ll watch the situation closely and, with input from City staff and others, take action as needed. 


Roy H. Otto, City Manager

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