Outlook: Cautious Optimism
September 8, 2021 -- Key sectors of the Santa Fe economy performed well throughout the 2021 fiscal year that concluded in June, and other sectors that had lagged roared back to life starting in February.
While overall revenues of $3.45 billion for city businesses in Fiscal Year 2021 did not quite match the FY19 pre-pandemic level of $3.6 billion, business activity increased over FY20 ($3.4 billion).
According to a late-August Finance Department report to the Governing Body, year-over-year comparisons of taxable gross receipts to FY19 show growth in four of the five months since February. The trend peaked in June, the last month for which citywide figures are available. June 2021 total taxable gross receipts for Santa Fe businesses surpassed June 2019 levels by $80.8 million, or 25 percent.
“The recovery is a good sign for local businesses, it’s good news for City finances that depend on tax revenues, and good for our ability to deliver services to all our residents," says Mayor Alan Webber. "This is part of the reward for our community’s courageous, unified response to the pandemic. To help keep it going, we need to maintain that same vigilance against the spread of the Delta variant.”
City Finance Department Director Mary McCoy says: “The impact of COVID-19 was initially severe, with Santa Fe businesses posting a loss of $500 million from February 2020 to January 2021. We are grateful to New Mexico’s Congressional delegation for passing the federal stimulus of $5 trillion that bolstered the economic recovery for Santa Fe.”
The impact and the recovery have varied by industry:
- Hospitality industry sectors such as accommodations, food services and arts, entertainment and recreation in FY21 did not recover to pre-pandemic levels for the fiscal year, but rebounded as re-openings got underway starting in February.
- Other industries such as retail trade and real estate saw a decrease in taxable gross receipts in FY20, but recovered in FY21 to surpass pre-pandemic levels.
- Finally, other industries such as construction and the professional, technical and scientific sectors posted year-over-year growth throughout the pandemic.
The Finance Department predicts that the economic recovery in Santa Fe is expected to continue, albeit at a more moderate pace in the coming months. Economists are forecasting that high-levels of consumer spending will moderate as the economy continues to recover through FY22. Additional economic disruption caused by COVID-19 variants like Delta remains a substantial unknown at this time.
You may read the memo here.