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S. Utah feels budget pinch

This is an archived article that was published on sltrib.com in 2008, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

With sales-tax revenue declining, Cedar City and St. George are both cutting budgets and moving around staff members.

Cedar City Mayor Gerald Sherratt said his city's latest sales tax revenues show an 11 percent dip.

"That's our largest source of funding," Sherratt said.

The city already cut its budget by 4 percent for the year and now has asked city departments to make more cuts to avoid laying off workers.

Some employees can move to other departments as needed.

Sherratt said approved projects, including those involving infrastructure, will go forward, but future projects could be delayed until the economy turns around.

Building permits are also down along with corresponding fees paid to the city.

Sherratt said 286 building permits were issued through September this year, totaling $37 million in value compared with 438 issued by the same time in 2007 valued at $95 million.

Cedar City developer Mark Meismer has felt the pinch in the housing market.

"No one in real estate is not being affected," he said. "This is the worst I've ever seen."

Meismer, a veteran local contractor, said the only thing keeping him going is the fact he began building houses and a reputation since well before the construction boom of the past several years. Many contractors who moved to the area to take advantage of the demand are now out of business.

Still, the poor economy and lack of money for mortgages are hurting his company, Mark I Development.

"I have four homes going [under construction] when I should have 40," he said. "It's terrible."

City Manager Ron Chandler said good planning by the city, including its 4 percent budget cuts, helped the city face tough times, but more still needs to be done.

"We've asked city departments to come in 2.5 percent under budget," Chandler said. "We don't want to wait until the end of the year [in July] to make up the cuts."

He said the city's 152 employees shouldn't fear immediate layoff because there are different ways of reducing spending like controlling overtime pay and shuffling workers between departments.

"If we have many months with [sales tax] down it is going to hurt us quick," he said.

St. George Mayor Dan McArthur also laments a dip of about 12 percent in sales tax revenue that is hurting the city's finances, along with its own dip in building permits.

"All our [financial figures] are down significantly," McArthur said. "Our [revenues] are at the levels of 2005 and 2006, but our costs have risen 20 percent."

Instead of laying off employees, St. George cut its budget this year by 10 percent and wants departments to shed another 5 percent.

The city wants to avoid laying off any of its 1,000 workers through pay freezes, and is trying to save money by not filling open position and nixing the $100 Christmas bonuses employees usually receive.

So far, there are 24 unfilled positions being covered by moving employees from other departments to pick up the slack.

Approved projects like a new airport, and other infrastructure work funding has been approved and will continue but some other capital improvements could be delayed, McArthur said.

Building permits issued by the city are also down and the impact fees paid to the city which can range from $12,000 to $20,000 a permit, said Matt Loo, development service director for the city

"It's tough, tough times," said Loo, who blamed the problem on an over-saturated housing market and tough new lending standards.

Jan E. Crispen, senior research economist with the Bureau of Economic Business Research at the University of Utah's David Eccles School of Business, said that as goes St. George, so goes southwest Utah.

Crispen, who was project manager of an economic and demographic study of Washington, Beaver, Iron, Kane and Garfield counties in southwestern Utah, said Washington County and St. George are the epicenter for growth and driving the economies in the region that saw a population boom during the past three decades.

"Washington County is the economic engine fueling this growth," the study says. " With the addition of 48,332 new jobs, Washington County accounted for 73 percent of all new jobs in the region and saw its employment share more than double from 33 percent in 1970 to 68 percent in 2006."

Crispen said the current weak housing market is a daunting problem for St. George and is associated with various issues like foreclosures and fewer building permits and loss of construction jobs.

"Construction jobs in the area are off, as they are statewide," Crispen said. "They are good-paying jobs and as they go away, [workers] have to replace that income and many don't have the skills for nonconstruction jobs."

Crispen said there is a good chance more people will return to school to learn new skills.

Those who lose well-paying jobs are also likely to tighten their wallets and buy less, translating into a drop in sales tax revenues for area cities.

She said Iron County, where Cedar City is located, and St. George are more diversified than the other counties and share a flow -- of workers for example -- that is stronger compared to more isolated areas like Beaver and Garfield counties.

"The counties have disparate economic bases, with Iron and Washington counties more closely aligned," she said.

mhavnes@sltrib.com

Single family residential commercial and other building permits issued by St. George to date:

2008

Residential: 156 permits, $24.5 million in value.

Commercial 160 permits, $61.8 million in value.

2007

Residential: 485 permits, $83 million in value.

Commercial: 227 permits, $77 million in value.

2006

Residential: 563 permits, $127.8 million in value.

Commercial: 221 permits, $119 million in value.

2005

Residential: 982 permits, $182.3 million in value.

Commercial: 203 permits, $76.5 million in value.

Source: St. George City

Single family residential commercial and other building permits issued by Cedar City:

2008 (through Sept.)

Residential: 95 permits, $23 million in value.

Commercial: 193 permits, $14 million in value.

2007

Residential: 261 permits, $64.8 million in value.

Commercial: 297 permits, $52.8 million in value.

2006

Residential: 387 permits, $89 million in value.

Commercial: 217 permits, $31.8 million in value.

2005

Residential: 537 permits, $110 million in value.

Commercial: 217 permits, $21.7 million in value.

Source: Cedar City

St. George sales tax revenue

2008 (through Nov.) $13.57 million

2007 $15.79 million

2006 $15.23 million

2005 $13.15 million

Source: St. George City

Cedar City sales tax revenue

2008 (through Nov.): $4.8 million

2007: $5.3 million

2006: $4.9 million

2005: $4.2 million

Source: Cedar City

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