The cost of hard-to-get goods and equipment was up an average of nearly 40% in La Junta over the past year, and that has this Eastern Plains city pitching to voters a 1% bump in the sales tax on November’s ballot.

The extra percentage point is projected to bring in around $1.4 million a year to this city of 7,300, which has an annual budget of $36 million. It would be La Junta’s first sales tax hike since 1982 — not coincidentally the last time the inflation rate reached levels seen today.

Voters rejected a sales tax increase just three months ago but the city is taking another stab at it.

“If citizens don’t vote for it, things will have to fall off the table,” City Manager Rick Klein told The Denver Post.

The challenge facing La Junta is not dissimilar to what dozens of other cities and towns across Colorado are grappling with in an uncertain economy where inflation, which peaked in June at a year-over-year rate of 9.1%, has severely eroded buying power in recent months.

The increasing cost of goods and services has begun to abate, but according to the Colorado Municipal League’s 2023 State of Our Cities & Towns survey released last month, “municipal officials consider inflation to be the greatest cause of concern” for the first time in the survey’s 15-year history.

While that may not come as a surprise following four decades of relatively tame interest rates and stable prices, the rise in inflation that started in 2021 is tantamount to a three-headed Hydra. Not only do pricier goods and services require more dollars at the cash register, but they exacerbate home affordability and make it tougher for cities to recruit and retain workers.

“If you don’t have more revenues coming in and you can’t grow your economy, then how the heck are you going to be able to deal with rising costs to keeping employees on board?” said Kevin Bommer, the league’s executive director. “The tentacles of inflation have impacted a lot of things.”

Among the other top concerns of municipal managers in the survey, which was conducted in late summer and included responses from more than 160 Colorado towns and cities, were unfunded road work, unfunded water and wastewater projects and public safety.

But not all is doom and gloom on the municipal front. Billions of dollars have flooded into the state from various federal COVID-19 pandemic relief bills — nearly $66 billion to be exact — along with more than $5 billion from 2021’s Infrastructure Bill for highways, bridges, public transportation, broadband internet service, water infrastructure improvements and airport projects.

The $1.9 trillion American Rescue Plan Act of 2021, which directed around $9 billion to Colorado to mitigate pandemic impacts, was the most powerful economic package for the state’s towns and cities, Bommer said.

“ARPA was the one and only time you see the funds go directly to the local governments,” he said, noting that federal monies are typically collected by the state before being passed along to cities and counties.

According to the Colorado Health Institute, nearly $2 billion in ARPA disbursements went to local governments in Colorado — split nearly evenly between counties and municipalities. But Bommer worries that not all Colorado cities and towns are getting their share from the myriad of other COVID-19 and nonpandemic bills that Congress has passed since 2020.

“If you’re a plains town or you’re up in the mountains without a grant-writing expert, how do you navigate it?” he asked.

It’s a concern shared by La Junta’s city manager. While his city does have a grant writer on staff, neighboring southeast Colorado towns with sparser populations do not.

“I worry whether these smaller towns will be able to access that money,” he said.

Hiring, retention “struggles”

The league’s survey shows that the tight labor market moved into second place in the list of concerns for 2023, up three spots from 2021. Nearly 70% of larger municipalities in the state are experiencing somewhat more, or much more, turnover than last year, and more than half of municipalities — 52% — are having a somewhat, or much harder, time hiring than in 2021.

Perhaps nowhere is the labor crunch felt more than in policing.

“We’re down 31 officers right now,” Arvada Mayor Marc Williams said.

And recruiting new officers to the Denver suburb of nearly 125,000 is difficult, he said. Two Arvada police officers have been killed in the line of duty in less than two years — one in June 2021 and one last September.

And the spotlight that’s been cast on police departments nationwide following social justice protests in response to the death of George Floyd at the hands of Minneapolis police in May 2020 hasn’t made things easier. That killing spurred Colorado lawmakers to pass a law that sets limits on police use of force and holds officers personally liable for civil rights violations.

According to another Colorado Municipal League survey, recent legislation “increasing civil and criminal liability” for officers is the top barrier to recruitment and the second biggest impediment to retention. Right next to that, “public perceptions of police” is another major factor keeping officers from signing up for duty.

“Police officers — a lot of them don’t want to be police officers anymore,” Bommer said. “If it’s not a crisis, it’s headed in that direction.”

The city of Craig, in Colorado’s northwest corner, has had trouble filling vacant positions on its 24-officer police force. Four officers left after the legislature passed HB-217, the police reform bill, in 2020.

The city of 9,000 residents 42 miles west of Steamboat Springs recently applied for grant money to pay for cadets to go through the police academy. It also gave a signing bonus of $5,000 to lure two recruits to the city.

“Trying to find certified officers after HB-217 was really difficult,” said Peter Brixius, Craig’s city manager.

He said the city has to take a close look at what it is paying its 91 workers to keep them around. In particular demand are skilled workers for Craig’s water treatment plant.

“We will be conducting another salary survey this year and we’re going to have to see what we can do to make the salaries equitable to the increased costs,” Brixius said. “The cost of energy is really what’s impacting our employees now.”

Arvada has had to raise the wages of city workers by 6% over the last two years, Williams said.

“There’s a lot of poaching going on between municipalities trying to get replacement workers,” he said.

Fraser, a mountain town of 1,400 next door to the Winter Park ski resort, was more aggressive than Arvada in 2022, approving 9% raises for its 29 municipal employees. The pay bump came during a year when the town lost its public works director, planning director, and water/wastewater superintendent.

“We’ve faced struggles with hiring for some time,” said Town Manager Ed Cannon, who moved to the tourist-trafficked town two years ago. “When we asked (prospective employees) why they wouldn’t come, they said they just can’t afford to live here.”

Everyone “needs more housing”

Fraser’s median home price has leaped to more than $1 million, Cannon said. On the rental side, the Mountain Migration Report, released in 2021, found that rents had increased 20% to 40% in Colorado mountain communities over the course of a single year.

In November, voters passed a property tax increase to fund a regional housing authority, dubbed the Fraser River Valley Housing Partnership. The authority is comprised of Fraser, Winter Park, Granby and Grand County with the purpose of bringing workforce housing to the valley. A housing needs assessment the organization recently conducted found that there is a 700-unit gap in affordable rental and homeownership in the area.

Meanwhile, Fraser is forging ahead with its own affordable housing project on an 11.3-acre parcel it purchased right in town last spring, with the help of a state grant, for $3.8 million. It will include 105 to 130 deed-restricted units, Cannon said.

In southeast Colorado, 240 miles away, municipalities are facing the same problem with workforce housing. While home prices are much less expensive in Baca, Bent, Crowley, Kiowa, Otero and Prowers counties when compared to mountain resort real estate, La Junta’s city manager said there is still a shortage of housing for the people who work the prisons and schools.

“Every town out here needs more housing,” Klein said.

Last year, the six plains counties banded together to get behind the Southeastern Colorado Workforce Housing project, which will deliver more than 100 affordable units in 10 locations across the half-dozen counties.

Stephanie Gonzales, executive director of Southeast Colorado Enterprise Development, said the counties are kicking in $630,000 in ARPA funds to pay for infrastructure. Developers are then tasked with bringing rental and for-sale units to Olney Springs, Granada, Springfield and Las Animas as part of the first phase of the buildout.

Back on the Front Range, Arvada is also wrestling with the challenge of providing workforce housing for those who can’t afford the stratospheric price of a home in metro Denver. The city says there are 686 units of affordable housing in various phases of development currently.

“Our frontline people — police officers, firefighters, teachers — it’s difficult for them to live in their community,” Williams, the mayor, said.

Bommer, with the Colorado Municipal League, said while there’s nothing Colorado cities and towns can do about inflation, they can — and are — dealing with its symptoms.

“Municipalities are not sitting around waiting for someone to tell them what to do,” he said. “The sky is not falling.”

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