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Slight increase in February sales tax

For the first time in 11 months, Archuleta County and the town of Pagosa Springs have seen a slight increase in sales tax revenues relative to the same period last year.

A report released Tuesday of sales tax revenues collected during the month of February indicated that sales tax revenues increased .05 percent over the same month last year. Over a 12-month period, sales tax receipts are down 6.87 percent from a year previous and down 7.07 percent in the first two months of 2010.

However, while the minuscule increase at least indicates a leveling out of the economy in free fall, it must be seen in perspective. In February 2009, sales tax receipts were down 25.46 percent from the same month in 2008 — falling from $513,584 to $382,813. The $383,013 collected this past February is still down 25.41 percent from the same month in 2008.

Nevertheless, the flat February numbers indicate a reversal of an 11-month trend when sales tax receipts showed a steady decline during that period (including double-digit declines in April, August and September of last year and in January of this year). In March of 2009, sales tax receipts showed a slight increase from the same month the previous year — .19 percent.

Year-to-date numbers have shown a consistent decline in sales tax receipts since January 2009 and March receipts would need to show an almost 14-percent increase over the same month last year in order to reverse the current year-to-date decline.

“The jury is still out on this,” said Pagosa Springs Town Manager David Mitchem. “We’ll just have to monitor the next couple of months and see if we break even or even see an increase.”

Relative to the region, however, Pagosa Springs has not fared as badly as other communities, nor performed worse than others.

Durango saw an eight-percent decline in sales tax receipts in 2009 relative to 2008, with January 2010 down 10 percent and February down 13 percent. Telluride was down 12 percent in sales tax revenues in 2009, while Grand Junction was down 20 percent in 2009 compared to the previous year.

Overall, the state of Colorado was down 10.5 percent in sales tax revenues during the past year compared with 2008.

While Pagosa Springs may have fared slightly better in sales tax revenues compared with its neighbors, it far outperformed those neighbors when it came to lodging tax receipts in 2009.

Presenting a report to the Pagosa Springs Town Council at the April 7 meeting, Town Tourism Committee Coordinator Jennie Green stated that in 2009, lodging tax receipts were up 9.2 percent. In comparison, Durango was down 10 percent last year, with Telluride down 22 percent and Grand Junction down 17.4 percent. Overall, Colorado saw a drop of 9.8 percent in lodging tax dollars during 2009.

According to Green, the increase in lodging tax may have contributed to local sales tax numbers. Using numbers generated by Mitchem and TTC Chairman Bob Hart, Green presented a scenario which, if correct, positioned local tourism as a significant factor in keeping the area’s decline in sales tax revenues to a minimum.

If Hart and Mitchem were correct in assuming that visitors spent an average of $147 per day (on lodging, meals, gas, shopping, activities, etc.), the 9.2-percent increase in room receipts would amount to an additional $87,271 in sales tax receipts — 2.8 percent in overall sales tax receipts in 2009. If those numbers are accurate, no increase in lodging would have pushed the 2009 decrease in sales tax revenues to almost 10 percent.

“We really don’t know how much our tourists contributed to the sales tax base,” Green said. “The tourists may have saved us entirely.”

While the town and county struggle to gain ground with sales tax revenues in 2010, the TTC reports that this year continues to bode well for lodging, as January saw a 12.66 increase over the same month last year, while February was also up 12.8 percent over 2009 (and a 28.45-percent increase over 2008).

Local residents and merchants could certainly use better news than what was revealed in Tuesday’s report. However, the news could have been much worse, especially when compared to neighboring communities. Furthermore, with lodger’s tax receipts continuing to exhibit a steady increase, the local economy might finally move out of the downward trend after being in a freefall for almost an entire year.

“I’m really excited about the summer music scene,” Green said, expressing optimism for the upcoming busy tourist season.

However, Mitchem was quick to acknowledge that several factors have kept the local economy stronger than that of surrounding communities and the state as a whole.

“Credit goes to our merchants, our Town Tourism Committee and County Tourism Committee,” he said. “I think Pagosans are a tough breed and when the going gets tough, they go after it.”