After a strong start in November, the holiday sales season had a lackluster finish, according to the latest sales tax collection numbers from the Colorado Springs Finance Department.
December sales, as measured by January sales tax collections, rose just 3.1 percent from December 2017 after a sizzling 10.9 percent jump in November, the department’s monthly sales tax report said. The weakness was widespread, with seven of the 15 industry categories declining from December 2017. Commercial machines, grocery stores and auto dealers posted the largest drops, as measured in sales.
“There is a bit of letdown here after the big increase in November,” said Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum.
“I’m not terribly surprised given that consumers started feeling not quite as confident in December and confidence has declined from there since over concerns about tariffs, the federal government shutdown and higher interest rates.”
The 3.1 percent increase to a record $16.8 million was the smallest monthly percentage gain since December 2017, when sales tax collections fell 1.1 percent from a year earlier. Collections for the year were up 6.9 percent to $171.9 million, up from a 4.4 percent increase in 2017 but not as strong as a 9.4 percent gain in 2016.
The city’s 2 percent tax is paid on purchases ranging from cars and business equipment to televisions and appliances and it pays for more than half of city spending for police, fire, parks and other services. The city also collects special taxes for road repair, public safety and trails, open space and parks totaling $101.5 million.
Other highlights from the report:
• The biggest increase in any industry came in building materials, where collections were up 17.1 percent, or $221,296, from December 2017. For the year, both the “all other” and business service categories were both up more than 12 percent, while medical marijuana and commercial machines posted the only declines.
• The city’s tax on hotel rooms and rental cars in December surged 22.8 percent to $418,984, the biggest percentage gain since a 39.3 percent jump in April 2017. Collections of the tourism tax last year were up 7.5 percent to $7.1 million, down from a 13.7 percent increase in 2017, the smallest annual gain since 2013, when the Black Forest fire slowed the tourism industry.
• Revenue from the city’s use tax — paid on equipment and machinery bought outside the Springs — fell 32.8 percent to $964,942 but finished the year slightly up at $10.1 million. Use tax jumped 15.4 percent in 2017. Last year’s 0.3 percent increase was the weakest performance by the tax since a 1.7 percent drop in 2011. Combined sales and use tax collections in December were up just 0.2 percent to $17.8 million, while annual collections rose 6.5 percent to $181.2 million.