Tightrope Economy Prosperous summer has jump-started Santa Fe businesses, but uncertainties from hiring to supply shortages remain as the pandemic marches on
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SEPTEMBER 1-7, 1-7, 2021 2021 •• SFREPORTER.COM SFREPORTER.COM SEPTEMBER
B Y B E L L A D AV I S b e l l a @ s f r e p o r t e r. c o m
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n paper, evidence shows businesses in Santa Fe are bouncing back after last year’s COVID-19 shutdowns made a circus out of the economy. Taxable gross receipts are up in several sectors including accommodation, food services and retail trade. Hotel occupancy rates rose back to pre-pandemic levels this summer and tourist spending wasn’t too far behind. Like visitors to the Plaza, hope has returned a year and a half into the pandemic. But the hope is tempered, SFR finds in numerous conversations with business owners, workers, economists and trade groups, by both immediate and long-term concerns. Supply chain disruptions have challenged businesses across sectors—from restaurants to construction companies to hotels. Like their national counterparts, local business owners have had trouble hiring, with some making changes to accommodate the surging labor demands. Masks again cover faces around town. With another surge of cases, the state reinstated an indoor mask mandate on Aug. 20, requiring businesses to once again warn customers with storefront signs. The specter of renewed restrictions is daunting, some business owners say, as is the prospect of once again facing tension with customers resistant to mask policies. One of the city’s biggest hotels is now reporting reservation cancellations. After reviewing February’s figures in May, city staff said they were “cautiously optimistic” that a positive trend in gross receipts tax revenue would continue into the summer. When a new report for June was issued Aug. 30, the optimism remained. After being able to operate at full capacity for the past two months, things are looking up for the city’s restaurants. Taxable gross receipts in accommodation and food services grew $33.8 million in June—the most recent figures available— compared to June 2020, an increase of 139%, but they also surpassed June 2019 levels by 12%. Almost every other sector is also showing vast improvement: • Real estate, rental and leasing was up about 133% in June from last year—an amount equal to 72% over June 2019. • Arts, entertainment and recreation increased 172% from the same period last year and beat 2019 by 9.3%. • Taxable gross receipts in construction jumped $15.6 million, or 33.2%, from last year.
Santa Fe’s trend lines—seemingly a bit of a tightrope walk, for now—are reflected across New Mexico, with recovery in progress, at least by traditional measures. The city’s GRT increased from $3.4 billion in fiscal year 2020 to $3.45 billion this year, but is short its pre-pandemic $3.6 billion. “We’re improving, but we’re not back to 2019 levels yet,” New Mexico State University Regents Professor Jim Peach tells SFR. “It’s good that we’re gaining some employment back; retail sales are back, but we’re not at the end of the recovery. It’s going to take a while for the economy to recover; and the Delta variant...will not yet show up in the money.” With the gains made in the past few months come a handful of challenges like supply and staff shortages.
It’s like a perfect storm with a combination of raw material shortages along with a lack of labor. -Matt Segura, co-owner, Southwest Spray Foam
Nellie Tischler, who owns local South Indian restaurant Paper Dosa with her husband Paulraj Karuppasamy, says getting supplies has been difficult because many items are low in stock and are more expensive. Tischler points to napkins and yogurt. Chicken, she says, used to cost $35 a case but goes for close to $90 now, causing some restaurants to take it off their menus. Matt Segura, co-owner of Southwest Spray Foam and Roofing and the president of the Santa Fe Homebuilders Association, says all sorts of building materials are in short supply, including lumber, metal roofing and, an essential for his own business, spray polyurethane foam for roofing and insulation. In the past, the wait for these materials would’ve been a week or two. Now it can take months. The supply inconsistencies have left Segura struggling, he says, to balance clients’ needs on smaller, simpler projects
