Grand Valley sales tax collections lag in 2016

Phil Castle, The Business Times

With continued declines in December, sales tax collections lagged in the Grand Valley during 2016.

There were some anomalies in the latest monthly figures, though, and local officials say they’re hopeful collections will increase in 2017.

“We feel like we’ve found the bottom,” said Jodi Romero, financial operations director for the City of Grand Junction.

The city reported a 1.9 percent decrease in sales tax collections in December compared to the same month last year. Mesa County reported a 5.3 percent year-over-year decline.

December collections represent November sales and the traditional start of the important holiday shopping season for retailers. The full extent of holiday shopping will be known in February, when January collections are tallied.

For all of 2016, city sales tax collections fell 1 percent below the year-end total for 2015. County sales tax collections dropped 3.1 percent.

The city reported collecting a total of more than $4 million in sales and use taxes in December. A 33 percent increase in use tax collections nearly offset the decrease in sales tax collections, so the monthly total almost matched last year.

Romero attributed the year-over-year decrease in sales tax collections to a difference in collections from one business that remitted an unusually large amount in December 2015 and an unusually small amount in December 2016. Removing that amount from the calculation results in a 3.7 percent increase in year-over-year sales tax collections, she said.

“With few exceptions, most business categories showed increases, including construction, restaurants, department stores, warehouse clubs and superstores showing the strongest growth,” Romero wrote in a memo to the Grand Junction City Council.

For all of 2016, the city reported collecting a total of almost $49.5 million in sales and use taxes That’s nearly $1.16 million and 2.3 percent less than 2015. Sales tax collections dropped $414,777 or 1 percent. Use tax collections, a more volatile portion of city revenue based in large part on sales in the energy sector, fell  almost $609,000 or 29.8 percent as local activity slowed.

City sales tax collections are expected to remain flat in 2017 in what Romero said could be a conservative projection. “I’m actually hoping it will be better.”

Mesa County reported collecting a total of nearly $2.5 million in sales and use taxes in December, a 6.2 percent decline compared to the same month a year ago.

Along with the decline in sales tax collections, use tax collections fell 15.3 percent on lower sales of automobiles and building materials purchased outside Mesa County but used in the county.

Eleanor Thomas, county budget manager,  said tax collections based on retail sales increased 3.3. percent in December compared to last year with gains in the sales of beverages, clothing and food more than offsetting declines in the sales of health and personal care items and sporting goods.

Still, county tax collections based on sales in other categories dropped 9.6 percent.

Thomas said she was puzzled by a 47.4 percent year-over-year decrease in sales tax collections for the telecommunications category. The difference amounted to more than $94,000 or nearly 74 percent of the total decline in sale tax collections.

Romero said there’s a possibility the same businesses that caused the anomaly in city tax collections could have been responsible for the difference in county tax collections.

For all of 2016, Mesa County reported collecting a total of more than $30.7 million in sales and use taxes. That’s about $1.4 million and 4.5 percent less than 2015. Sales tax collections dropped 3.1 percent, while use tax collections fell 16.2 percent.

Tax collections on retail sales edged up four-tenths of a percent in 2016 compared to 2015. But collections in other categories declined a total of 4.8 percent.

County sales tax collections are projected to rise a half of a percent in 2017 over what was collected in 2016, although Thomas also said she hopes the increase is actually bigger.