Online sales and the booming housing industry combined to generate a third monthly consecutive increase in sales tax revenue in August, compared with a year earlier, for the city of Colorado Springs, according to a report.
Revenue from the city’s 2% sales tax rose 2.3% from August 2019 to $15.5 million, the biggest monthly gain since February, the city’s Finance Department reported. However, revenue from the city’s often volatile use tax — paid on equipment bought outside the city — fell 7.4% to $582,169, the lowest monthly total since November. As a result, combined sales and use tax revenue was up 1.9%, slightly less than July’s 2.6% gain, which was fueled by a big jump in use tax revenue.
Sales and use tax revenue remains down $5 million, or 4.2%, this year to $115.7 million; that’s a result of double-digit percentage drops in March and April when state restrictions to slow the spread of the COVID-19 pandemic forced many businesses to shut down or curtail operations. When special taxes for road repair, public safety and trails, open space and parks are included, the decline in revenue from the same period last year totals nearly $8 million.
Colorado Springs Mayor John Suthers said he is “pleased that during June, July and August, despite tourism numbers being down, we have been doing as well as we have. It could be a lot worse — we had expected we could be down as much as 30%. It is remarkable how resilient we have been.”
He worries, however, that increasing numbers of COVID-19 cases in recent weeks could trigger more state restrictions on businesses that could curb sales during the critical holiday season.
Much of the increase in August was generated from building materials, up 12.2% from a year earlier; miscellaneous retail (including online sales), up 9.5%; all other, up 26.3%; and furniture, appliances and electronics — which benefits from housing construction — up 20%. Those gains more than offset declines in the hotel and restaurant industries, which both fell by double-digit percentages during the same period.
Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum, said the city is “doing quite well, especially for a place with a lot of tourism. That speaks to the strength in housing and online sales that are not impacted by the decline in tourism and shows that a lot of people remain employed and are still buying.”
Revenue from the city’s tax on hotel rooms and rental cars continued to reflect a struggling tourism industry, with the August total down 26.8% from a year earlier to $657,000. However, that is the highest monthly total since September 2019 and the smallest percentage decline since a small increase in February. Revenue from the “bed and car” tax through August was down 45.5% from a year ago to $2.89 million.