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Hail slows Colorado Springs sales tax revenue for second consecutive month

November 13, 2017 Updated: November 13, 2017 at 5:22 pm
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Heavy damage to vinyl siding during last Thursday's hail storm. Tuesday, August 2, 2016. photo by Jerilee Bennett/The Gazette

Blame last year's huge hailstorm for the first back-to-back monthly declines in Colorado Springs sales tax revenue in nearly six years.

Collections last month fell 0.4 percent, or nearly $60,000, from October 2016 to $14.6 million. Revenue from auto dealers and building material suppliers fell by more than $400,000 as spending last year surged on replacement vehicles and roof repairs, according to a report from the city's Finance Department. Last month's collections reflect sales in September. The Rocky Mountain Insurance Information Institute estimated claims from the July 28, 2016, storm would total $352.8 million for damage to homes and vehicles. Collections from all other categories in October were up 3.3 percent from a year earlier.

The story was the same in September, when collections from auto dealers fell 37.3 percent, or $753,298, while revenue from all other sources increased 1.6 percent. The consecutive declines are the first since November and December 2011. Even with declines in September and October, year-to-date collections are still up nearly 6 percent to $118 million.

"This is not an indicator of the economy slowing down. Overall, the rest of economy is still moving in a positive direction," said Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum.

The 2 percent sales tax is a key revenue source for the city, funding more than half of its budget for public safety, parks and other basic services. The performance of the tax also is a barometer of the local economy.

Collections of the city's use tax - collected on equipment and machinery bought outside the Springs - surged 52.1 percent to $1.39 million, the most since January 2008 and the biggest percentage gain since March 2016. Overall sales and use tax revenue for October was up 2.7 percent from a year ago to nearly $16 million.

Other highlights of the October report:

- Revenue from the city's tax on hotel rooms and rental cars resumed double-digit growth in October, jumping 13.5 percent from a year ago to $713,843, and so far this year is up 14.7 percent from the same period last year to $5.36 million.

- Collections from the city's road repair sales tax in October rose 3.3 percent from October 2016 to $4.95 million and totals $38.8 million so far this year, up 7.6 percent from the same period in 2016.

- Besides auto dealers and building material suppliers, sales tax from commercial machine purchases last month also dropped sharply - 26.1 percent - to $312,967. Revenue from business services, hotels and motels and utilities all were up by double-digit percentages from a year ago.

- Revenue from special sales taxes for public safety and trails, open space and parks in October were up 2.7 percent from October 2016 to $3.99 million and so far this year are up 6.2 percent from the same period a year ago to $31.3 million.

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Contact Wayne Heilman: 636-0234

Twitter @wayneheilman

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