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Report shows sales tax down

A report on September sales tax receipts released last week suggests that the local economy is still in decline.

The report indicated a 17.07 percent decline in sales tax receipts compared to the same month last year, the largest decline in sales tax receipts since the 25.46 percent drop in February.

Year to date, the county and town are down 8.79 percent in sales tax receipts from 2008.

While several key indicators suggest a healthier national economy, including increased consumer spending and rising consumer confidence, that good news has so far eluded most area merchants. In fact, according to Pagosa Springs Town Manager David Mitchem, grocery stores appear to be the only part of the retail sector to show an increase in sales over the past year.

“Other retail sales are down and sales of construction materials are down significantly,” Mitchem added.

A decline in sales for construction materials indicates a similar decline in local construction — traditionally, a sector accounting for about one-fifth of the local economy.

The dismal sales tax revenue report appears in the midst of other data that could suggest a less bleak picture of the local economy. Earlier this month, the Town Tourism Committee reported that lodger’s tax receipts were up more than 9 percent from Sept. 2008, indicating a rise in visitors to the area. Overall, the TTC reports a 7.37 increase in lodger’s tax receipts over last year.

Reporting a decrease for the second straight month, preliminary data from the Bureau of Labor Statistics showed that local unemployment fell another four-tenths of one percent to 6.2 percent in September. In August, BLS local unemployment numbers showed a full percentage drop from the previous month, from 7.6 percent to 6.6 percent

Unfortunately, that drop might not accurately reflect employment conditions in the county, due to unavailable U6 numbers for local unemployment. Unlike the traditional U3 number, which gauges unemployment based on unemployment insurance collections or filings the U6 figure includes “discouraged workers”— persons not currently looking for work because they believe no jobs are available for them — and those who are “marginally attached” meaning employed part time only because no full-time jobs are available.

A glance at jobs listed in last week’s SUN classified ads shows that, of nine specified listings for employment, seven were listed for part-time positions, with one of the full-time positions listed for work in Durango.

Since the BLS does not report U6 numbers for local unemployment, the decrease in Archuleta County’s U3 number could be accounted for by an increase in U6 figures.

Nationwide, unemployment figures continue to rise. Two weeks ago, the BLS report of 10.2 percent unemployment (the highest in 26 years) represents about 15.7 million out of work. Alternately, the October U6 number rose to 17.5 percent, indicating that about 27 million Americans are either out of work, have stopped looking for work, or are only working part time.

Hoping to put the brakes on unemployment, the Obama administration and the U.S. Congress began working on a jobs bill this week, with administration officials saying they hope to have the package ready before Christmas.

According to House Democratic Leaders, the bill would focus on infrastructure investment and improvement, specifically transportation, with an eye on putting Americans back to work.

While many economists credit this year’s earlier stimulus package for preventing an economic meltdown akin to the Great Depression, some economists felt that initiative did not go far enough, leading to record unemployment. Those economists point to the latest jobs bill as proof that the earlier stimulus bill was largely underfunded.

Should the jobs bill pass, it remains to be seen how it would benefit Archuleta County. Stipulations for proposed infrastructure projects laid out in the previous stimulus package mandated that those projects be “shovel ready” (i.e. already designed and engineered), and it is assumed those stipulations would attain for a new jobs bill. Facing tight budget constraints, however, neither the town nor the county have much in the way of pending “shovel ready” capital improvement projects.

Although the town and county have informally agreed to pursue improvements for the North Pagosa Boulevard/U.S. 160 intersection (various options were presented at a joint town/county last summer), plans for the project remain largely preliminary. If a jobs bill is passed, local government is not yet in a position to take advantage of whatever funds would become available — or create any possible jobs.

More jobs equates to more jobs. Jobs created means more dollars put into the economy, creating further demand for goods and services, leading to the creation of further jobs to meet the increased demand. Those jobs, created to meet those increased demands, create even more jobs, as more money flows into the economy from newly-created jobs, and so on. While some economists argue that an artificial infusion of cash into the economy will create inflation, that has not appeared to be the case; inflation has hovered near zero since the previous stimulus package and continues to hold at that level.

While a Labor Department report released yesterday showed a 0.3 percent rise in consumer prices — a touch higher than the 0.2 percent that economists had expected — department officials attributed the increase to higher energy prices and the biggest jump in new car prices in 28 years.

Furthermore, the prime rate for lending remains at a record low and it has been the prime rate that has been leveraged against further inflation.

While more jobs in the area would translate into increased spending and increased sales tax revenues, neither the town nor the county appears to be in a position to improve the situation.

“The downturn is disappointing,” Mitchem said, regarding decreased sales tax revenues and stating the obvious. Reporting that local restaurants have been down slightly in sales, Mitchem said that, while lodger’s tax revenues have increased, visitors adding to that equation have either been buying food at local grocery stores or hauling supplies into the county, but not otherwise buying much locally.

The town is weathering the situation, despite diminishing sales tax receipts, “We’ve taken a conservative approach to expenditures,” Mitchem said, “and that paid off. Our reserves are up.”

jim@pagosasun.com