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Tax results mixed

Mirroring the national economic situation, the local economy appears to be slowing in its slump, relative to the rest of the year, with one sector showing substantial increases over previous years.

According to the Town Tourism Committee (TTC), lodger’s tax receipts for July showed an 11.99-percent increase over the same month last year, with a 9.05-percent increase year-to-date, compared to last year.

Lodger’s tax receipts are a key indicator of the number of tourists visiting the area. In fact, with Visitor‘s Guide requests showing astounding numbers — an increase of 134.77 percent over 2008 — data seems to indicate a boost in tourism for the area.

“They’re here in larger numbers than we’ve seen,” said TTC Coordinator Jennie Green.

“There are more properties available than what we had last year,” she added. “Most of those changes are in vacation properties. Clearly, we’re seeing more visitors.”

In fact, vacation properties showed a 32-percent increase over the same time last year, seeming to provide evidence for Green’s assertion.

Sales tax receipts for July, however, do not show growth and indicate that, while the effects of the recession may be lessening, it is by no means over. In July, sales tax receipts showed a 2.88-percent decline from the same month last year, with a 6.84-percent decline for this year, compared to 2008.

Still, July’s decline in sales tax receipts could be an indication that the worst has passed. First of all, it is the lowest decline this year (with only a 5.71-percent increase in January and a .19-percent increase in March trumping July’s numbers) and continues to show a decreasing trend in declines since February (when a 10.95-percent year-to-date decline was reported). Likewise, July’s decline is far less discouraging than declines shown in February (down 25.46 percent), April (down 13.68 percent) or June (down 8.23 percent).

Another factor that could indicate that the recession is slowing locally is the price of gas and its effect on sales tax receipts. In July 2008, the national average price for regular unleaded was $4.11 while that price had dipped to $2.53 in July 2009 — a price drop of almost 62 percent. As such, July 2008 gas prices would have artificially boosted sales tax receipts for that month relative to July 2009 receipts.

Furthermore, local unemployment figures continue to show a robust recovery. July unemployment figures in Archuleta County fell to 7.5 percent, well below the national average and far below the county’s highest-ever recorded unemployment rate of 9.1 percent this past March (which was slightly higher than the national average that month).

While most economists agree that the U.S. has seen the worst of the recession and that, if the national economy has not yet shown growth, it has at least shown signs of a slowing decline; it is difficult to determine if the slowing decline of sales tax receipts and growth in lodger’s tax receipts is an indication of a local economy on the rebound.

While it is clear that one sector of the local economy is actually doing better in 2009 (according to TTC figures, seven out of nine hotels or motels reporting showed increased receipts over last year), what is not clear is why that sector shows robust growth while other facets of the local economy appear to be in a slump.

For its part, the TTC is hoping to assist local businesses by offering tourist marketing classes next month. “We’re hoping local businesses will take advantage of co-op advertising or leverage their dollars with more effective marketing to tourists,” Green said.

Green added that the classes will include an overview on how the TTC is marketing to tourists and what businesses can do to reach out to that market. Details of the class will be released by the TTC later this month.

As lodger’s tax receipts continue to climb and sales tax receipts continue to decline (although at a much slower rate than earlier this year), it will be interesting to see if or when those numbers equalize, i.e. if those numbers show some parity. More than that, many area residents would probably like to know if the slowing decline in sales tax receipts, coupled with an increase in lodger’s tax receipts, is an indication that the worst of the recession is behind us.

jim@pagosasun.com