Colorado Springs sales tax collections jump 10.5 percent in June

By: Elise Schmelzer
July 23, 2014 Updated: July 23, 2014 at 8:18 pm
Caption +
Mark Fife works Sunday, April 7, 2013, to calibrate display screens at Boeing's booth at the 29th National Space Symposium at the Broadmoor. Photo by Mark Reis, The Gazette

Spending by visitors to the Space Symposium in Colorado Springs propelled city sales tax revenues in June to their biggest monthly increase in nearly 1 1/2 years.

Collections in June - which represent May sales activity - totaled $11.6 million, a 10.5 percent increase over the same month last year, according to a report by the Colorado Springs Finance Department.

It was the largest percentage increase in sales tax collections since February 2013, and the dollars collected in June were at their highest level since January of this year. Before the release of the latest figures, sales tax collections in the first several months of this year from the city's 2 percent sales tax saw only single-digit percentage increases on a year-over-year basis; one month even saw a decline.

The Colorado Springs-based Space Foundation moved its Space Symposium to May this year from its traditional April date because of construction at The Broadmoor hotel, where the event has been held for 30 years.

The 9,000 participants the event attracts every year "had a very direct impact" on sales tax collections, said Fred Crowley, a University of Colorado at Colorado Springs economist.

The increase created by the Space Symposium's change of dates also showed up in the city's tourism tax, which totaled $428,5390 in June - a 13.6 percent gain when compared with the same month last year. So far this year, tax revenues from hotel rooms and rental cars total $1.4 million, a 5.9 percent increase over the same period in 2013.

Crowley expects sales and tourism tax revenue to remain strong through the tourism season, including a similar bump in sales in August when the USA Pro Challenge bike race will host a stage in the city.

"As long as we don't have any floods or fire we should have a good tourism season," he said.

Although June's sales tax collections looked rosy, the revenue collected so far this year from the city's sales tax - which totals $50.9 million - hardly amounts to a significant increase, Crowley said. The 2.7 percent year-to-date increase over the same period last year is slightly higher than the U.S. inflation rate of 2.1 percent.

"Retail sales are barely keeping up with inflation and represent very little growth in the local economy," he said.

Crowley said the replacement of smaller stores by big-box retailers could be a factor in the lack of growth. Although the two store types sell the same products, national retailers can sell at a lower price, which reduces tax collections. Stores in Fountain and other smaller cities that surround Colorado Springs also draw customers and their money away from the city, he said.

Of sales tax collected, a nearly 200 percent increase in collections on the sale of commercial machines was the biggest increase across retail categories; it was most likely the result of a one-time purchase by a manufacturer, Crowley said. Sales tax revenues from business services fell 34.2 percent, the largest retail decline.

Meanwhile, the city's 2 percent use tax, which is collected on manufacturing equipment, building materials and other materials bought outside of the Springs but used inside the city, totaled $653,859 in June, up 4.6 percent from last year. Year to date, however, collections are down 3.7 percent.

Revenue from the 2.5 percent combined sales and use tax on medical marijuana continues to grow on a monthly and yearly basis. Collections totaled $125,018 in June, up 14.5 percent from last year. Year to date, the taxes have generated $601,807, up 13 percent from the same period in 2013.

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