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I would like to ask a simple question. Where is the next boom coming from for our local economy? What is the next growth engine going to be?
We’ve been through several: mining, logging, and most recently housing. As difficult as it is to accept, the housing boom is over. We’ll never see another period like the ’90s and early ’00s here again. That time of wild double-digit growth was driven by baby boomer demographics, a relatively undiscovered Pagosa Country, and by Pagosa Lakes and other residential areas coming online to meet the new demand.
Lately Rec Center supporters have changed their sales tax projections, from basing them on 10 years of historical data to 25 years. Possibly to offset the grievous 22 percent error they made in their earlier estimates. Twenty-five years of course captures those glorious boom years. Our 10-year history is stagnant, almost no growth in revenue or population. Going back 25 years though, and averaging, one can get close to 5 percent annual growth, if one were to squint at graphs and not pay too much attention to that big 10-year flat spot. Incidentally, going forward 5 percent annual growth for 10 years would be 62.8 percent, for 20 and 25 years it is 268 percent and 339 percent respectively. Nice.
Clueless optimism is what crashed the economy in 2007-08. Millions went bankrupt assuming their homes would go up in value forever. Instead of improving their skills, or working harder, or saving, many just borrowed against that imaginary equity and spent it on nonessentials. Or they became “investors,” flipping houses not realizing how risky leverage is and how quickly it could turn on them. Municipalities based anticipated revenue on similar projections. Banks weren’t immune and made trillions of dollars of bad loans. We already know how that ended. In fact we are still in or just barely emerging from a recession locally.
Back to my first question, where is the next boom coming from? I don’t know, but one thing I can say is this. None of the previous booms started off from under a massive debt load for recreation facilities. None of the previous booms looked at a future where the Town would be exporting tens of millions of dollars over decades to bankers, or by putting up half our current general fund as collateral to do it. No recession has ever ended by raising taxes. We simply cannot borrow and spend our way to the next Big Thing.
In the meantime there are so many other relatively inexpensive projects we could tackle to improve quality of life and appeal of downtown. We must also think carefully about the next phase of growth, and have resources ready whatever it turns out to be. Higher taxes, 25 years and $45M of debt is not a very smart way to prepare. Let’s have the discussion, let’s fix basic infrastructure. Let’s complete existing unfunded programs and improve our balance sheet. And let’s get ready to grow.