Sales and use tax collections decline in Grand Valley

Phil Castle
Phil Castle

Phil Castle, The Business Times

City and county officials blamed lower sales and use tax collections in August in part on some unusual events.

But as the overall trend continues downward, officials are adjusting budgets for the remainder of this year as well as next year.

“We’re very cautious, and we’re going to be extremely conservative,” said Jodi Romero, financial operations director for the City of Grand Junction.

The city reported a 6.6 percent decline in combined sales and use tax collections for August compared to the same month last year. Mesa County reported an even bigger year-over-year drop at 15.1 percent.

August collections reflect July sales.

The city collected a total of  more than $4 million in sales and use taxes. Sales tax collections were down 7.5 percent, while use tax collections fell 11 percent.

Romero said sales tax collections were down in comparison to last year in part because of tax collections on automotive sales that were three-times higher last year than historical levels.

It’s unknown why that occurred. But taking that out of the calculations, the drop in sales tax collections for August 2016 would have been 1.6 percent, she said.

Mesa County collected a total of more than $2.4 million in sales and use taxes. Sales tax collections were down 10.7 percent, while use taxes were down 42.8 percent.

Eleanor Thomas, county budget manager, said $160,000 was pulled from collections for prior year refunds due to taxpayers filing a lawsuit against a telecommunications company. In addition, a $70,000 tax payment from a home improvement business was deferred to next month.

But even if those things had not happened, county sales tax collections still would have declined 4 percent, Thomas said. “We are still struggling with sales tax and hope that next month and the coming months will be better.”

Combined city sales and use tax collections have declined on a year-over-year basis for six straight months and total nearly $33 million so far in 2016. That’s more than $824,000 and 2.4 percent less than collections for the same span in 2015.

Sales tax collections have edged down six-tenths of a percent. Use tax collections, a far smaller but more volatile portion of revenue, has dropped 39.4 percent.

Romero attributes the downward trend in part to slowing in regional energy exploration and production that’s followed lower commodity prices. Moreover, presidential elections tend to add to the uncertainty.

The city has taken steps to realize savings in the 2016 budget to offset declining revenues, Romero said. While city officials don’t necessarily expect 2017 to be worse than 2016, they’re not counting on next year to be any better, she said.

Combined county sales and use tax collections increased on a year-over-year basis in only two out of eight months so far in 2016, totaling more than $20.3 million. That’s about $1 million and 5 percent less than what was collected during the same span in 2015.

Sales tax collections fell 3.9 percent, while use tax collections dropped 14.9 percent.

Year-to-date tax collections from retail sales edged down only a tenth of a percent. But collections from other industries dropped 5.7 percent. Collections from the oil and gas industry fell 64.7 percent.

Mesa County commissioners have implemented a hiring freeze as part of their efforts to deal with declining tax revenues.