Tax reports reflect drop in holiday sales

Phil Castle, The Business Times

The Christmas shopping season was anything but merry for Grand Valley retailers if declining tax collections accurately correspond to declining sales.

According to January reports that reflect December activity, sales tax collections dropped 4.4 percent for Mesa County and 4.1 percent for the City of Grand Junction compared to last year.
The declines are worrisome not only for business owners and managers, but also the administrators involved in budgeting for the county and city. Sales tax collections from December usually constitute the biggest single month for revenues. Moreover, the county and city now start 2013 behind in what was projected as year of continued growth in sales tax collections.

“If this continues for the next two or three months, we’re possibly going to have to make some adjustments to our projections,” said Marcia Arnhold, finance director for Mesa County.
Those adjustments in turn could prompt the county commissioners to change plans for expenditures, in particular the $41 million allocated for capital projects.
Elizabeth Tice-Janda, revenue supervisor for the City of Grand Junction, said no formal budget adjustments have yet been considered, but that could change if a downward trend in sales tax collections continues. “We’re watching it extremely closely.”
For Mesa County, a total of more than $2.5 million in sales taxes were collected for its capital improvement and general funds. More than $780,000 in additional sales taxes collected by the county were distributed back to cities and towns in the county, about $453,000 of that to Grand Junction alone. Those numbers reflect a 4.4 percent decline over what was reported in January 2012.

Arnold said she’s worried about not only the latest decrease in sales tax collections, but also the longer-term trend. 

Thanks in large part to gains early in the year, total sales tax collections for the county capital improvement and general funds for 2012 came to slightly more than $26.8 million, an increase of almost 3.4 percent over 2011. However, tax collections have declined on a year-over-year basis in five out of the last six months.

Arnold projected a 4 percent increase in tax collections in 2013 over 2012, but could be forced to revise that number downward.
The City of Grand Junction reported collecting almost  $4.6 million in sales taxes and another $196,000 in uses taxes. Given an almost 32 percent drop in use tax collections, total collections came in at 6.1 percent less than last year. “It hit us a little bit harder than we thought,” Tice-Janda said of the declines.

Although it’s difficult to know for sure, the declines could have reflected a downturn in overall holiday spending combined with an increase in the proportion of purchases made online for which no sales taxes were collected, she said.

Counting the drop in the January report, sales and use tax collections have dropped in five out of the last six months.

The city has projected a 3 percent increase in sales tax collections in 2013, while forecasting use tax collections to hold steady.

Meanwhile, lodging tax collections have dropped for two straight months, a reflection of decreasing business for local hotels and motels.

According to the Grand Junction Visitor & Convention Bureau report for January, $55,014 in lodging taxes were collected, 11.4 percent less than what was reported for the same month last year. Lodging tax collections dropped on a year-over-year basis 6.7 percent in the December report.

Prior to the December report, lodging tax collections had increased for 16 consecutive months.

Since lodging tax reports lag a month behind collections, the January and December reports reflect hotel and motel stays in November and December.