Colorado Springs sales and use tax revenue rebounded in a big way in May, declining just 3.3% from a year earlier as retailers and other businesses reopened after the state’s stay-at-home order expired in late April.
Sales and use tax revenue in April plunged 21.8% from a year earlier as restaurants, many retailers, bars, nightclubs, gyms, barbers and many other businesses closed under the order in late March that was aimed at slowing the spread of the coronavirus. City officials had expected the May total to decline by about 13% and the rest of the summer by 5% 10%, so the May drop was better than the city’s most optimistic forecast for any month through August.
Sales and use tax revenue is critical for the city, paying more than half the cost for public safety, roads, parks and other public services. Colorado Springs Mayor John Suthers called the report “good news” and believes the recovery was better than expected as a result of pent-up consumer demand. He still expects declines through August of 5% -10%. “If you had told me two months ago that we would only be down about 8% so far this year, I would have been very happy. We expected to be down 20%.”
Much of the recovery was fueled by sales from building material retailers, auto dealers and miscellaneous retail, which includes collections from online giant Amazon.
That’s because both home and vehicle sales were strong and many consumers turned to online shopping during the lockdown order.
The biggest percentage gains were from medical marijuana, up 61.5%, and auto dealers and building material retailers, both up more than 25%.
Tatiana Bailey, director of the University of Colorado at Colorado Springs economic forum, said she expects pent-up demand to continue, especially from higher-income consumers.
But other retail categories were still struggling. Revenues from hotels were down more than 80% as The Broadmoor and several of the city’s largest hotels were shut down. Clothing sales were down 37.3% and restaurants, which were not allowed to open dining rooms until late in May, were off nearly 30%.
Together, the three categories delivered a combined revenue hit of $1.55 million from May 2019.
Collections from the city’s sales tax was down 3.8% from May 2019 to $13.6 million, and was down so far this year 8%, or more than $5 million, from the same period a year ago.
May revenue from the city’s use tax, paid on equipment and other items bought outside the city, was up 10% from May 2019 to $600,581, but remains off 11.8% so far this year at $3.17 million.
Other details from the report:
• Revenue from the city’s tax on hotel rooms and rental cars in May made only a slight improvement from April, dropping 73.8% from May 2019 to $176,743.
The April total was down a record 74.3%; the total so far this year is off 49% to $1.28 million.
• Collections from the city’s special tax for road repairs in May were down 3.3% to $4.39 million and so far this year are off $8.1% to $20.3 million.
• Special taxes for public safety and trails, parks and open space raised $3.54 million in May, down 3.3% from a year ago, and $16.4 million so far this year, down 8.2% from the same period last year.