Fannie Maes cash register.jpeg (copy)

A cash register from the former Fannie Mae Duncan’s Cotton Club in Colorado Springs. Colorado Springs sales tax revenue surged 42.3% to nearly $19 million, the second-highest monthly total and the biggest percentage increase in more than 45 years, as COVID-19 pandemic restrictions eased.

In a sign that Colorado Springs' economy is roaring back from the pandemic, city sales tax revenue surged in April to the second highest monthly total on record, the city's Finance Department reported Friday.

The $18.9 million collected last month, which reflects sales made in March, was up 42.3% from a year ago — the biggest percentage increase in records since 1976. The April total was about $100,000 less than the record $19 million collected in January, which included much of the holiday shopping season and is typically the biggest month for sales tax. The April 2020 total was down 13.1% from April 2019 and the lowest for that month since 2016.

Colorado Springs sales tax collections post biggest gain in 4 years

About half of the gain came from miscellaneous retail — which includes online sales and such businesses as sporting goods stores, pet supply stores and jewelry stores — as well as building materials and restaurants. Revenue from hotels and clothing stores doubled and collections from car dealers — a major source of sales tax revenue — were up more than 75% from April 2020. Business services and grocery sales were the only two of 15 categories to decline during the same period.

"That is truly amazing. I'm thrilled," Colorado Springs Mayor John Suthers said. "April was a very good month, but we have to keep it in perspective since April 2020 was very affected by COVID-19. Still, this April was up 22.5% from April 2019, so it shows that the (local) economy is really humming. The only cylinder in the engine that is not firing as strong is tourism, and even that industry is improving."

Colorado Springs sales tax revenue surge continues into 2021

Revenue from a separate tax on hotel rooms and rental cars more than doubled to $471,257 but was still down 15% from two years ago and slightly ahead of the same month in 2018. Collections from the tax so far this year are off 12.4% from the same period last year to $1.08 million but that is a major improvement from last year when the tax generated nearly 40% less than it did in 2019.

"I am a little surprised it (sales tax) is that strong. I was thrilled to end last year basically flat. Clearly, a lot of this increase is stimulus money. What happens when that goes away?" said Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum. "These numbers also tell us that a lot of people are moving here and spending money beyond just buying a house."

Colorado Springs sales tax revenue surges in December

Revenue from the city's use tax — paid on equipment businesses but outside the city — also surged, jumping 43.7% to $1.06 million. Overall sales and use tax collections were up 42.4% to $19.9 million, and so far this year have increased 23.9% to $49.6 million. The city also collects special taxes for public safety, road repairs and parks, trails and open space that combined generated another $25.1 million.

Sales tax revenue has increased every month since July, compared with the same month a year earlier, and the gains have been at least 9% in six of the past seven months. That is the strongest growth since sales tax collections rose by double-digit percentages for eight consecutive months in late 2016 and early 2017. If revenue gains continue at the current rate, Suthers said the city may either have to issue refunds to taxpayers or ask voters to keep that revenue under limits included in the City Charter.

Colorado Springs sales tax collections rise again despite pandemic

The city levies a 2% sales tax on consumer and business purchases of vehicles, appliances, business machines and many other items. The tax is a key economic indicator and funds more than half of the city's general fund that pays for public safety, roads and other services.

Contact Wayne Heilman 636-0234

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