Colorado Springs sales tax revenues soared last month, as consumers and businesses continued to buy and spend at a solid pace despite the ongoing uncertainty created by the COVID-19 pandemic.
The increase was a hopeful sign for the local economy.
The Springs has continued to see newcomers who are moving to the area, said Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum. Some economic sectors also have remained relatively healthy; the pace of home construction, for example, is at a 15-year high and the city collects millions of sales tax dollars each year on the purchase of building materials.
Defense contractors and professional and technical firms, meanwhile, are among employers without large-scale layoffs and that have been able to accommodate staffers working from home, Bailey said.
And while jobs have been lost in hospitality and other industries, many — though not all — have been regained, she said.
"That's purchasing power," Bailey said of employees who remain on the job. "That's people being able to go out and make the purchases that they normally would."
The city, which levies a 2% tax on consumer and business purchases of motor vehicles, appliances, TVs and other items, collected nearly $16 million in sales tax revenue in November, a 13.8% year-over-year increase, according to a report released Friday by the city's Finance Department.
Sales tax revenues collected by the city in November reflected purchases that were made in October.
November's revenue gain was the fifth straight monthly increase for the city, while the double-digit percentage hike was the largest since April 2017.
With the latest collections, city sales tax revenues now total $143.7 million for the year. And despite a three-month decline at the onset of the pandemic, year-to-date sales tax revenues have rebounded and trail last year's collections over the same period by only about 1%.
The upturn in sales tax revenues over the past few months also is good news for city government, as cities and states nationwide were hit hard by the pandemic and federal relief packages haven't helped them that much, Bailey said.
The comeback of sales tax revenues, along with voter approval of a city ballot measure last month that allows Colorado Springs to keep $1.9 million in excess 2019 sales tax revenue and all of its revenue collected in 2020, will help the city maintain services and speed the local economy's recovery, Bailey said.
"That enables the city to have that little pot of money that otherwise we would have been returning," she said.
But the city still faces more fallout from the pandemic, she said.
A ban on indoor seating at restaurants in Colorado Springs and El Paso County that took effect in late November, along with limits on the number of customers who can frequent retail stores, potentially will hurt city sales tax collections over the next few months, Bailey said.
"There's no way sales and use taxes won't be impacted negatively," she said. "Restaurants being closed for indoor dining, that, in and of itself, is going to impact sales tax."
Other highlights of the city's latest sales tax report include:
• Of 15 retail industry categories tracked by the city, collections from the sale of building materials in November rose 43.7% to $2.3 million. Other big percentage gains included miscellaneous retail, up 57.8% to $2.3 million; medical marijuana, climbing 41% to $242,283; and grocery stores, increasing 16.4% to $759,820. Biggest percentage losers: hotels and motels, down 35.5% to $552,202; commercial machines, falling 17.5% to $173,040; and furniture, appliances and electronics, off 11.6% to $798,631.
• Collections from the city's tax on hotel rooms and rental cars fell again, dropping 20.3% to $489,122. It was the eighth straight month that so-called bed-and-car revenues declined as hotels struggled to fill rooms in the wake of fewer leisure and business travelers. Restrictions on hotels' ability to host large meetings and conferences also hurt bed-and-car revenues.
• Revenues from the city's use tax — paid by businesses on equipment they purchase outside the city — fell 54% to $606,487. Year-to-date, use tax revenues were down 10.6% to $7 million.