Latest city tax report reflects year-over-year improvement

For the first time in more than a year, Grand Junction city sales and use tax collections show year-to-year improvement.

City sales and use tax collections totaled $3.86 million for June, a 1 percent increase over the $3.82 million reported in June of last year. Since tax reports lag a month behind consumer spending, June collections reflect May sales.

Meanwhile, sales tax collections for Mesa County continued to reflect year-to-year declines through June. The county collected $2.94 million in June based on spending in May. That was a 2.97 percent decrease from the same month last year, but also was the smallest decline so far this year.

Lodging tax collections at Grand Valley hotels, yet another economic indicator, also continue to lag in year-to-year comparisons of monthly reports. A total of $127,839 in lodging taxes was collected in June based on hotel and motel stays in May. That’s a 1.65 percent decline from the $129,982 collected in June 2009, but was the smallest percentage decline of any month in 2010.

For the year, city sales and use tax collections reported for the first six months of the year totaled $21.77 million, a 13 percent drop from the same period in 2009. Total collections for 2009 came in at 20.7 percent less than 2008.

County sales tax collections totaled $16.42 million for reports covering the first six months of the year. That’s 12.11 percent lower than for reports covering the first six months of 2009. The county collected $34.76 million in sales taxes for all of 2009, a 20.72 percent decline from the 2008 total.

Both the city and county made budget cuts in 2009 as tax collections lagged behind projections. A downturn in the regional natural gas industry combined with a global recession coincided with decreased consumer spending in the Grand Valley last year. That trend continued for tax reports filed in the first five months of this year.

The city of Grand Junction instituted a 3 percent pay cut for all city employees this year, held off on filling some open positions, transferred employees between departments and postponed the purchase of some equipment.

Mesa County instituted a salary freeze for most employees and unpaid furlough days for some workers. For the remainder of this year, the county is asking departments to reduce spending by 2 percent from levels they’d expected to spend by the end of 2010.

The decline in lodging tax collections for June represents the lowest proportional decline in year-to-year reports since 2008. For reports covering the first six months of this year, lodging taxes declined 15.71 percent compared to the first six months of last year. Business usually spikes at hotels in May as warmer weather marks the beginning of the summer tourism season. That spike is reflected in the June reports. The busiest month for hotels is usually September, when tourists come to Colorado for the fall foliage and to the Grand Valley for events that range from the Colorado Mountain Winefest to the Fruita Fall Festival. September business is reflected in October reports.

Lodging tax collections peaked in 2008, when the city collected $1.5 million. The collections in 2009 dropped to $1.21 million.

Local hotel managers attributed the drop in part to a decline in natural gas activity. Energy workers often use hotels for temporary housing. Energy executives often stay in hotels when traveling here from corporate offices in Texas and other states.