Pace of sales tax collections slowing
Phil Castle, The Business Times
The pace of sales tax collections, a key indicator of retail sales, continues to slow with year-over-year decreases in both Grand Junction and Mesa County.
According to its latest monthly report, sales and use tax collections in the city dropped 2 percent, the first decline since November.
Sale tax collections in Mesa County have trended downward for three months, declining almost 3.3 percent in the latest report.
City and county finance managers are at a loss to pinpoint the exact cause of the decline, but said they’re closely monitoring the situation. Sales taxes collected so far in 2012 continue to outpace 2011, although the difference is shrinking.
According to its August report, the city collected a total of $3.87 million in sales and use taxes, a 2 percent decrease from what was reported in the same month last year. Since tax reports lag a month behind, August reports reflect July sales.
Jodi Romero, financial operations manager for the city, said a number of factors could be at play, including election-year uncertainty that’s prompted some consumers to put off large purchases. “It’s really a strange time for the consumer.”
Moreover, the latest numbers are compared to a time last year in which tax collections were on the rise.
The latest monthly use tax collections were down more than 19 percent, a reflection of decreased activity and investments by companies serving the energy industry in the region, Romero said.
Through eight months of reports for 2012, sales and use tax collections totalled almost $33 million, a 2.6 percent increase over the same span in 2011. Those reports reflect sales between December and July.
Given conservative budgeting, Romero said she still expects sales tax collections for the year to exceed budget projections.
A continued downward trend through the end of this year could affect projections for next year, however, she said. “We’re watching it very close.”
According to its August report, Mesa County collected a total of nearly $2.15 million in sales taxes for its capital improvements and general funds. Another $814,000 in taxes were collected and distributed back to cities and towns in the county. Those numbers constitute an almost 3.3 percent drop from what was reported the same month last year.
The pace of sales tax collections in Mesa County have slowed over the past three months and decreased on a year-over-year basis for the last two months.
Marcia Arnhold, finance director for the county, couldn’t attribute the decline in sales to a particular industry, but said she’s monitoring collections. “We’re going to be watching this closely.”
According to reports for the first eight months of 2012, the county collected a total of more than $18 million in sales taxes for its capital improvement and general funds. Another $6.9 million in taxes was collected and distributed back to cities and towns. Those figures represent an almost 5.7 percent increase over the same span last year.
That makes Arnhold more optimistic about a sustained recovery from the recession. “We’re going to have some bumps up and down. But I think were going to slowly pull out of this.”