Colorado Springs sales tax collections rise for third consecutive month

February 20, 2014 Updated: February 20, 2014 at 6:00 pm

Colorado Springs retailers finished the holiday shopping season with a small gain, according to the latest sales tax collection report released Thursday by the Colorado Springs Finance Department.

Revenue collected in January from the city's 2 percent sales tax - levied on items that include vehicles, appliances, furniture, clothing and building materials - rose 4.3 percent from a year earlier to $13.1 million. The January collections reflect sales made in December, the heart of the holiday sales season.

The January increase was the third consecutive monthly gain after a slight decline in October, the first drop in nearly two years. Collections for all of 2013 were up 5.5 percent from 2012 to $127.1 million, slightly slower than the 5.6 percent increase the previous year.

"It was a pretty lackluster month," said Tom Binnings, a senior partner in Summit Economics LLC, a local economic research and consulting firm. "Still the growth for the year is consistent with the long-term trend and that is good news."

Nearly all of January's increase came in just three categories - commercial machines, miscellaneous retail and grocers. Big-ticket items like vehicles and building materials, which had fueled much of the recovery in the city's sales tax numbers in recent years, were either down or up only slightly.

January's use tax, collected on manufacturing equipment, building materials and other items bought outside the city, fell 11.7 percent from a year earlier to $937,172, but was up 9.5 percent for the year to $9 million.

Combined sales and use tax collections in January were up 3 percent from a year ago to nearly $14 million, and for the year increased 5.7 percent to $136.1 million. That total doesn't include special sales taxes for public safety, tourism and trails and open space, which totaled $38 million.

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

The breakdown: Categories with the largest percentage increases in January from a year earlier were commercial machines, up 41.4 percent; utilities, up 17.1 percent, and grocery stores, up 16.8 percent. Categories with largest declines were department and discount stores, off 6.6 percent; restaurants, down 3.8 percent, and auto dealers, off 1.6 percent.

Medical marijuana: Sales tax collections from medical marijuana businesses in January rose just 5.3 percent from January 2012 to $112,167, the smallest monthly increase in two years and the second smallest percentage gain in the five years the city has collected tax on such businesses. For the year, collections from medical marijuana businesses were up 22.5 percent from 2012 to $1.34 million.

Tourism tax: January collections of the city's tax on hotel rooms and rental cars fell 11.5 percent from a year earlier to $197,854, the biggest monthly drop since August 2012. The total for the year edged up 2.2 percent from the previous year to $4.02 million.

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