Sales tax collections continue to decrease

Phil Castle, The Business Times

Sales tax collections, a key measure of retail activity, continue to decline, extending a downward trend that’s not only puzzled government officials, but also forced them to reconsider their budgets for this year.

According to a March report prepared by the City of Grand Junction, sales and use tax collections dropped 6.8 percent compared to the report for the same month last year. Mesa County reported that its sales tax collections dropped nearly 6.5 percent.

Counting the latest declines, city sales and use tax collections for the first quarter were down 5.1 percent compared to the same span last year. County sales tax collections for the first quarter were off 4.6 percent.

Because tax reports lag a month behind,  March reports reflect February sales. Totals for January through March reflect sales for December through February.

“It’s definitely not where we want to be,” said Elizabeth Tice-Janda, revenuer supervisor for the City of Grand Junction.

City sales and use tax revenues have declined on a year-over-year basis in seven out of the last eight months. Recent declines have occurred in nearly every industry sector, Tice-Janda said. “It’s a reflection of an economy that’s not flourishing.”

The city reported collecting a total of more than $3.3 million in sales and use taxes in March and $11.8 million for the first quarter. First quarter collections lagged behind last year by nearly $640,000 and came in at more than $880,000 less than what was budgeted.

Jodi Romero, financial operations director for the City of Grand Junction, said the city has compensated for declining revenues by finding savings in the budget. “So far, we’re OK.”

  But unless the trend changes, the new city council and city administrators could have to make adjustments, Romero added.

For Mesa County, sales tax revenues have declined on a year-over-year basis in eight out of the last nine months.

For March, the county reported collecting a total of about $1.9 million in revenues for its capital improvement and general funds.  The county collected another $728,000 it distributed back to cities and towns, including $431,000 to Grand Junction.

For the first quarter, the county collected nearly $6.4 million in revenues for its capital improvement and general funds. An additional $2.4 million was distributed back to cities and towns.

Marcia Arnhold, finance director for Mesa County, said sales tax collections would have to increase almost 6.4 percent for the remaining nine months of the year to meet budget projections. Since that increasingly appears unlikely, Arnhold said she will lower those projections. “If we get to a flat percentage, that would be great.”

County commissioners and staff likely will have to review and change budgeted expenditures, particularly for capital projects funded by sales tax revenues, Arnhold added.

Like the city, county sales tax collections have declined “across the board,” Arnhold said.

Although she said she doesn’t have a specific explanation, Arnhold said it appears as though Mesa County has lagged behind in the economic recovery and  unemployment rates have remained high.

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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