Consumers and businesses kept spending at a fast clip in July, led by restaurants and building materials, with sales tax revenue up 7.2% from a year earlier, according to a report from the city of Colorado Springs Finance Department.
Collections of the city’s 2% sales tax in August, which reflects sales in July, increased 7.2% from a year earlier, the second-largest of the seven monthly increases this year after an 8.9% gain in May (sales tax revenue declined in June). Sales tax revenue this year is up 4.8% from a year ago to nearly $100 million.
Tom Binnings, a senior partner in Summit Economics, a local research and consulting firm, said the sales tax numbers show that the “local economy in July was about as good as it gets at that point. The fact that the growth was almost across the board shows that the local economy is hitting on all cylinders.”
The two largest gains in August sales tax collections came in the two largest categories, restaurants and building materials, which were up 6.9% and 5.9%, respectively from a year ago. All but one category — auto dealers — were up from a year ago and auto dealers fell by less than 1% as a result of a 2018 hailstorm that triggered an avalanche of car sales in the second half of the year.
The city levies a 2% sales tax on purchases other than food and prescription drugs, funding more than half of city government for public safety, parks and other services. The city also collects special taxes for road repairs, public safety and trails, open space and parks as well as use tax on equipment and machinery bought outside the city.
• The city’s sales tax on hotel rooms and rental vehicles — a key tourism industry barometer — rose 6.7% from a year ago to a record $992,070, breaking a record $930,092 set a year earlier. The tax has generated $4.41 million so far this year, up 7.9% from a year earlier.
• Revenue from the city’s road repair sales tax in August increased nearly 7% to about $5 million and totals $32.6 million this year.
• Collections of the city’s use tax edged up less than 1% to $665,705, but this year remain down 4% to $5.09 million.