Taxing matters: Latest collections a mixed bag

Phil Castle
Phil Castle

Phil Castle, The Business Times

Sales and use tax collections constituted something of a mixed bag in July with encouraging gains in some categories, but continued declines in others.

“There’s a little bit of positive stuff,” said Eleanor Thomas, Mesa County budget manager.

The county reported a year-over-year increase in sales and use tax collections on the strength of automotive sales.  A gain in sales tax collections for the City of Grand Junction was more than offset by a continued decline in use tax collections.

Mesa County reported collecting a total of nearly $2.9 million in sales and use taxes, an increase of more than $69,000 and 2.4 percent over July 2015.

Sales tax collections edged up three-tenths of a percent with increases in retail sales as well as sales in the auto repair, transportation and wholesale categories. Use tax collections jumped 23.3 percent on an increase in automobile sales that occurred outside the county, but on which taxes were collected because the purchasers live in the county. July tax collections reflect June sales

The July increase in tax collections was only the second monthly gain for Mesa County in 2016. Through the first seven months of this year, a total of nearly $18 million in sales and use taxes have been collected. That’s a decrease of nearly $650,000 and 3.5 percent over the same span last year. Sales tax collections have declined 2.9 percent, while use tax collections have dropped 8.9 percent.

Mesa County commissioners have implemented a hiring freeze as part of efforts to deal with declining tax revenues. County department heads also have been asked to look for additional savings.

Heading into the final quarter of the year, it’s projected that 99 percent of county appropriations will be spent by the end of the year along with a projected $400,000 shortfall in a vacancy savings budget.

The circumstances follow a downturn in the energy sector related to low commodity prices and, in turn, declining tax revenues.

Eight out of 10 of the largest taxpayers in Mesa County are businesses in the energy industry. While a total of 76 oil and natural gas wells were drilled last year, none have been drilled this year. The assessed valuation of oil and gas production has fallen 68 percent this year, which contributes to a 1.4 percent decrease in the tax base for the upcoming year. Based on 2015 mill levies, this translates into a reduction of $323,000 tax revenue to the county budget.

The City of Grand Junction reported collecting a total of more than $4.5 million in sales and use tax collections during July, a decrease of more than $63,000 and 1.4 percent compared to the same month last year.

Sales tax collections rose 1.7 percent on increased sales at building material outlets, liquor stores and restaurants, said Jodi Romero, financial operations director for the city.

In a separate analysis for the second quarter of the year, the city reported increased year-over-year sales tax collections for the construction and motor vehicle categories as well as hotels and liquor stores. Collections were down from the miscellaneous retail and general merchandise categories, which includes appliance, clothing, electronics, furniture and sporting goods stores as well as department stores and so-called superstores.

Tax collections were up on sales in the Mesa Mall and along the 24 Road corridor as well as along U.S. Highway 6 & 50 and Patterson Road. Meanwhile, sales tax collections were down along North Avenue as well as the downtown and Orchard Mesa areas.

For July, the gain in sales tax collections was more than offset by a 41.4 percent drop in use tax collections and what Romero said was a reflection of the slowdown in the energy sector related to low commodity prices.

Through the first seven months of 2016, sales and use tax collections for the city totaled more than $28.9 million. That’s nearly $540,000 and 1.8 percent less than collections for the same span in 2015.

Sales tax collections edged up four-tenths of a percent. But collections of use taxes paid by businesses in the energy industry dropped 41.7 percent.

Romero said the slowdown in the energy sector has affected the local economy even as a presidential election year has added an element of uncertainty.

But the long-term outlook is more upbeat, she said, as the Rural Jump-Start Program and other efforts promote economic development in Mesa County. Moreover, rapid growth on the Front Range of Colorado likely will prompt more people to relocate to Western Colorado and the Grand Valley.

“There are some good things on the horizon for our local economy,” she said.