Winners, losers during local holiday sales season

February 13, 2012
photo - Restaurants fared well in city sales tax collections. Photo by JERILEE BENNETT, THE GAZETTE FILE
Restaurants fared well in city sales tax collections. Photo by JERILEE BENNETT, THE GAZETTE FILE 

The city of Colorado Springs reaped record sales and use tax revenue from the holiday shopping season, but many merchants likely weren’t celebrating as sales at department and discount stores and furniture, appliance and electronics retailers all declined, city officials reported Monday.

Combined sales and use tax collections in January rose 7.1 percent from a year earlier to a record $13.4 million, according to figures from the city’s Finance Department. Tax collected in January reflects December sales, including much of the traditional holiday sales season. Much of last month’s gain came from business services providers, restaurants and automobile dealers, which more than offset declining collections in some other key categories.

“People seem to be more confident with a lot of the good news we’re hearing about the national economy. That combined with strong car sales from people replacing aging vehicles produced a good holiday season,” said Tom Binnings, a senior partner in Summit Economics, a local economic research and consulting firm.

Combined sales and use tax collections for the year — the city measures them from February through the following January to include collections from sales in December — were up 3.8 percent from the previous year with the biggest gains coming from business services, hotels and motels. The annual total was still down $3.8 million, or 3 percent,, from the record $125.7 million collected in 2007, before the recession hit in Colorado Springs.

Sales tax: Sales tax collections in January were up 9.6 percent, but nearly half the gain came from onetime revenue from audit or merchants. The audit revenue was 18 times higher than that collected in the same month a year earlier; without it, sales tax collections would have risen by 5.5 percent.

Use tax: Collections in January on manufacturing equipment, building materials bought outside the city and used in the city fell 18.9 percent from a year earlier. But audit revenue generated nearly 40 percent of collections in January 2011; without that revenue being part of the comparison, use tax collections would have jumped 27.4 percent last month.

The breakdown: Categories showing the greatest percentage increases in sales tax collections during January compared with a year earlier were business services, up 48.8 percent; utilities, up 24.8 percent; and commercial machines, up 10.2 percent, though restaurants and auto dealers generated more of the revenue gains. Collections from auto dealers were up 9.5 percent, while collections from restaurants were up 6.9 percent. Categories with the biggest declines were furniture, appliances and electronics, down 3 percent; building materials, down 0.8 percent; and department and discount stores, down 0.4 percent.

Why it’s important: Sales and use tax collections fund more than half of the city’s annual budget for police and fire protection, roads, parks and other services. Sales tax also is a primary measurement of consumer spending, making it a key barometer of the vitality of the local economy.

Medical marijuana: January sales tax collections on medical marijuana and marijuana-infused products brought in $61,402, up just $370, or 0.6 percent, from a year earlier. That’s the smallest monthly increase in the three years the city has been collecting sales tax from medical marijuana businesses and the smallest monthly total since March.

Tourism tax: January collections of the city’s tax on hotel rooms and rental cars fell 0.7 percent from a year earlier, the second consecutive month collections from the tax declined after six consecutive months of increases. Collections for the year were up 6.1 percent from a year earlier to $3.95 million.

Contact Wayne Heilman: 636-0234 Twitter @wayneheilman
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