After several months of sales tax collections showing 2011 to be relatively flat in relation to 2010 collections, August collections showed a 1.97-percent drop compared with the same month last year, the Colorado Department of Revenue (CDR) reported Tuesday.
Although year-to-date collections show this year with a 5.31-percent increase compared with the same time period last year, those numbers are questionable due to inconsistencies in collections from some sectors and audits conducted throughout the year have appeared to artificially inflate county and town sales tax revenues.
For instance, the Transportation and Warehousing sector showed zero tax collections throughout most of the year (and for all of 2010), then showed $102,549 in May collections and $72,495 for June collections. Those months showed 24.38 and 13.16-percent increases, respectively.
Furthermore, August 2010 showed a little over $2 million in additional collections following a CDR audit for the period of February 2003 through December 2008.
Given inconsistencies in CDR collections for the area makes it difficult for local officials to forecast trends in overall sales tax revenues, much less determine how various sectors are performing on a month-to-month basis.
If the numbers in Tuesday’s report are to be trusted, most major sectors of the local economy were either slightly down or relatively flat compared to collections in August 2010.
Accounting for 44.2 percent of sales tax collections this year, Retail was down 4.7 percent in August. At a distant second, Accommodation and Food Services, accounting for 17.3 percent of collections this year, was up only .56 percent compared to last year.
Utilities, accounting for 8.9 percent of collections, was up 3.7 percent in August.
Manufacturing — the largest growing sector of the local economy — was up 10.9 percent in August and accounts for 5 percent of collections. In 2004, manufacturing only accounted for 2.21 percent of collections and has grown every year since then.
Conversely, Construction has seen a year-to-year slide in its share of sales tax collections. Accounting for 2.56 percent of collections in 2004, it is down to 1.3 percent for this year.
As far as the share of sales tax collections, Retail has shown the largest decrease during the past eight years: accounting for 52.5 percent of collections in 2004, the sector slipped 8.3 percent to this year’s level.
Clearly, the topography of the town and county’s economy has been changing. What is less clear is how that economy is doing while the rest of the country appears to edge closer to the brink of a double-dip recession. Unfortunately, while the numbers appear fairly good at first glance, there appears to be more here than what meets the eye.
The local economy reflects conditions on the national level. Yesterday, the Federal Reserve Bank announced that it would continue to keep interest rates low, hoping to spur growth and employment by setting favorable terms on borrowing by businesses.
The Fed policy is also intended to keep mortgage rates low in order to fuel buying in the sagging housing market.
The Fed also announced yesterday that it expects the economy to improve in the medium term, but forecasts that the national unemployment rate would ease only slowly.
Last month, President Obama unveiled a plan to spend almost a half trillion dollars in order to create jobs for infrastructure projects. On Tuesday, Senate Republicans killed the president’s proposal.
Like the nation, Pagosa Country appears to be stalled in a moribund economy. And like the rest of the country, it will only be an infusion of new jobs that will spark further economic growth.