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Sales tax slump resumes

Phil Castle, The Business Times

After three straight months of year-over-year increases, sales tax collections have resumed a downward trend in Mesa County. Unless there’s yet another change between now and the end of the year, 2013 collections likely will fall short of 2012.

The prospect portends not only lower sales for retailers, but also less revenue for local governments.

“This may be our new normal,” said Jodi Romero, financial operations director for the City of Grand Junction.

The city reported collecting a total of more than $4.1 million in sales and use tax revenues in September — down almost $300,000, or 6.7 percent, from the same month last year. Mesa County reported collecting a total of more than $2.3 million for its capital improvement and general funds — nearly $26,000, or about 1 percent, less than last year.

Because tax reports lag a month behind collections, September reports reflect August sales.

Prior to the September reports, tax collections had increased over the previous year for three months, ending a nearly year-long slide.

Romero said the latest numbers were lower in part because they’re compared to what was an unusually strong month for collections in 2012.

But Romero also attributes the long-term trend in declining sales tax collections to what she suspects to be a smaller population in the aftermath of the recession and slow recovery.

In addition, use taxes collected on the sales of equipment and construction materials, most of that for the energy and commercial construction industries, dropped more than $217,000, or about 61 percent, in the September report compared to last year.

For reports through the first three quarters of 2013, the city collected a total just over $36 million in sales and use taxes. That’s more than $1.2 million, or 3.3 percent, less than what was reported for the same span in 2012.

While Romero said she had hopped collections would hold steady in 2013, that appears less likely.

The city has accomodated what’s been so far a 5.7 percent decrease in budgeted revenues for 2013 and will budget no increase for 2014, Romero said.

Eleanor Thomas, budget manager for Mesa County, said the September report reflected an increase in retail sales in the county, including sales of automobiles and home improvement merchandise. But the increase was more than offset by a decrease in the more volatile sales tax collections from the manufacturing, mining and natural resources industry sectors, she added.

Through three quarters of 2013, the county has collected a combined $20 million for its capital improvement and general funds. That total is almost $340,000, or nearly 1.7 percent, less than for the same span in 2012.

Assuming sales tax collections don’t fall on a year-over-year basis more than 7.2 percent over the next three months, total collections for 2013 still will meet projections, Thomas said.

However, collections lag behind what initially was budgeted as a 4 percent increase for the year, forcing county officials to adjust the budget and delay some capital projects.

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 Oct 16 2013. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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