Latest sales tax gain small, but upward trend continues

Phil Castle, The Business Times: 

While sales tax collections in Mesa County continue to outpace last year, the latest report reflects the smallest monthly gain since November. The City of Grand Junction reported strong sales tax collections for the month, but a sharp drop in use tax collections.

Overall, sales tax collections continue to exceed budget projections — a trend that bodes well not only for government coffers, but also the retail activity that generates the revenue.

According to its June report, Mesa County collected a total of $2.24 million in sales taxes for its capital improvement and general funds.

That total constituted slightly less than a 1 percent increase over the report for June 2011. Proportionally, the gain was the smallest since November, when tax collections dropped 7 percent from the same month the year before.

The June 2012 report included another $850,000 in sales tax collections distributed to cities and towns in Mesa County, including Grand Junction. That number also was just 1 percent above collections for the same time last year.

Marcia Arnhold, finance director for Mesa County, said she was unsure why the latest gain was so small given a six-month string of increases topping 6 percent, including a 12.2 percent jump in the May report.

“This can happen with sales tax. I’m hard-pressed to explain that one,” Arnhold said. The long-term trend in sales tax collections continues upward, however.

For reports through the first half of 2012, Mesa County collected a total of nearly $13.6 million for its capital improvement and general funds. The county collected almost $5.2 million in sales tax revenues it distributed to cities and towns. Those figures were 8.5 percent higher than the same span in 2011.

The latest numbers leave Arnhold feeling optimistic, but cautiously so. “We’re still on track to meet our projections, but we’re going to watch this closely,” she said.

Mesa County assesses a 2 percent sales tax with 1 percent allocated to a capital fund used to pay for roads, bridges, buildings and other improvements. Of the remaining 1 percent, 0.45 percent goes to a general fund for operational expenses. The other 0.55 percent is distributed to cities and towns in the county. Sales taxes account for about 19 percent of county revenues.

According to its June report, the City of Grand Junction collected a total of more than $4 million in sales and use taxes, a number that includes almost $514,000 in sales taxes from the county. Sales and uses tax collections were up 1.7 percent from the June 2011 report.

At nearly $3.4 million, city sales tax collections increased 5.8 percent from last year. But at just $170,410, use tax collections dropped 50 percent. The city imposes use taxes on goods purchased from supplies outside the city, but used inside the city.

Jodi Romero, financial operations director for the city, acknowledged that use tax collections have lagged compared to last year. While companies providing support services to the energy industry increased their investments in equipment and materials in 2011, they haven’t sustained that level of spending in 2012, Romero said. Consequently, use tax collections in 2012 are closer to those received in 2010, she added.

Meanwhile, year-over-year increases in sales tax collections have more than offset decreases in use taxes, a far smaller component of city revenues, Romero said.

According to reports for the first half of 2012, the city has collected a total of more than $24.6 million in sales and use taxes, including almost $3 million in sales tax distributions from the county. Total collections year to date outpaced collections during the same span in 2011 by 3.8 percent.

Romero said she expects the trend to continue through the second half of 2012. “We’re hoping for a holding pattern for the rest of the year.”

The city assesses a 2.75 percent sales tax, with 2 percent allocated to the general fund and 0.75 percent earmarked for capital construction.

Sales and use taxes account for about 63 percent of city revenues. Higher tax collections reflect more hotel and motel stays. A monthly measure of hotel and motel stays in Grand Junction continues to outpace last year.

According to a Grand Junction Visitor & Convention Bureau report for June, lodging tax collections totaled $138,433. That’s an 8.2 percent increase over lodging tax collections in the report for June 2011. June reports reflect hotel and motel stays in May.

For reports covering the first half of 2012, lodging tax collections totalled $503,032, a 7 percent increase over the same span in 2011. Year-to-date numbers reflect hotel and motel stays between December and May.

Barb Bowman, a division manager who oversees the VCB, said she expects lodging tax collections in 2012 to continue to outpace those in 2011 — but moderately so with a gain of about 3.6 percent.

Several other measures of tourism tracked by the VCB and included in the June report reflected mixed results.

A total of 28,661 unique visits to the VCB Web site was reported, a 12.6 percent gain over last year. Meanwhile, 2,597 visits to the Grand Junction Visitor Center were reported, a 5.1 percent decline. For reports covering the first half of 2012, unique Web site visits were up 4 percent, and visits to the center were up 2.7 percent.

 

Phil Castle is editor of the Grand Valley Business Times, a twice-monthly business journal published in Grand Junction. Castle brings to his duties nearly 30 years of experience in editorial management positions with Western Colorado newspapers. In addition, his free-lance work has appeared in a variety of publications, including the Washington Post. He holds a bachelor's degree in technical journalism from Colorado State University.
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Posted by on Jul 19 2012. Filed under Business News, Trends. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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