Colorado Springs News, Sports & Business

Gazette Premium Content Sales tax collections for Colorado Springs show lackluster shopping activity in January

by WAYNE HEILMAN wayneh@gazette.com - Published: March 26, 2014

If Colorado Springs consumers are feeling freer to open up their wallets as the national economy improves, they're not showing it, at least not at local stores.

Taxes collected by the city of Colorado Springs for purchases in January barely increased from the same month in 2013, according to the latest report from the city's Finance Department.

February collections reflect sales made in January.

Revenue collected in February from the city's 2 percent sales tax, reflecting January's sales - rose 0.6 percent from a year earlier to $9.29 million, the smallest monthly increase October. October's collections actually were down slightly from the year before - the first year-over-over decline in nearly two years.

Collections in the second half of the year grew at 3.2 percent from the same period a year earlier, down from 8 percent growth in the first half.

"A lot of the growth last year came from sales of building materials due to the rebuilding of homes destroyed in the Waldo Canyon fire," said Fred Crowley, senior economist for the Southern Colorado Economic Forum.. "here has been a decline in real (inflation-adjusted) income and weak growth in employment. The community is still struggling and has yet to enter a recovery, and the sales tax numbers reflect that."

The 2 percent tax is levied on items that include vehicles, appliances, furniture, clothing and building materials. Two major categories measuring discretionary consumer spending fell by double-digit rates, including collections from clothing shops and department and discount stores, which declined 16.1 percent and 18.2 percent, respectively.

Collections on business services and sales of commercial machines also dropped sharply, down 25.8 percent and 12.2 percent, respectively. Without a 34.6 percent jump in collections on building materials, February collections would have dropped by 2.2 percent from a year ago.

Use tax, collected on manufacturing equipment, building materials and other items bought outside the city, more than doubled to $1.08 million, the highest monthly total since April. However, without $641,835 in payments resulting from taxpayer audits, the February total would have been down 6.6 percent from February 2013. The audit revenue also inflated the combined sales and use tax collection total, turning a slightlgain for the month into a 6.8 percent jump to $10.4 million. That doesn't include $2.77 million in special sales taxes for public safety, tourism and trails and open space.

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.

Medical marijuana: Sales tax collections from medical marijuana businesses in February were up 20.9 percent from a year earlier to $114,059.

Tourism tax: February collections of the city's tax on hotel rooms and rental cars edged up 1.4 percent from February 2013 to $197,826, the second increase in the past three months.

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Contact Wayne Heilman: 636-0234

Twitter @wayneheilman

Facebook Wayne Heilman

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