Consumer spending in Colorado Springs fell in May for the first time in 18 months, though the decline was less than 1%, according to a report from the City of Colorado Springs Finance Department.

Collections of the city’s 2% sales tax in June, reflecting sales in May, edged 0.8% lower from a year earlier to $14.1 million, the first monthly drop since collections were off 1.1% in December 2017. The 8.9% gain in May collections was the biggest this year. Even with the June decline, sales tax revenue this year is up 4.7% to $67.9 million after increases of at least 3.9% in every other month.

Colorado Springs sales tax revenue posts biggest gain of year in May

The drop was triggered by a $311,142, or 17%, reduction in revenue from the miscellaneous retail category, which has declined every month this year. All other categories were up nearly $100,000, or 0.7%. The city said a retailer it is prohibited from identifying that typically ranked in the top 20 contributors to the category canceled its sales tax license in mid-2018. Toys R Us and several other major retailers shuttered local stores in early to mid-2018.

Mayor John Suthers called the overall decline “slight” and said he’s not worried about it, especially since consumer spending was strong in May 2018. He also noted that rainy weather during May hurt many of the region’s tourism attractions that have since recovered as weather improved into June and July.

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Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum, said the retail sector is a bellwether for economic changes and is sensitive to changes in consumer confidence and expectations of economic conditions. “We have already seen sales of cars and houses level off, and while one month is not enough to see a major change, it is certainly on my radar.”

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 sales taxes for roads, public safety and trails, open space and parks as well as use tax on equipment and machinery bought outside the city. Sales tax revenue is a key measure of consumer spending and the health of the local economy.

Consumer spending helps propel Colorado Springs sales tax collections in March

Other highlights from the report:

• The city’s tax on hotel rooms and rental vehicles — a key tourism barometer — rose 7% to $674,088. Collections of that tax have risen every month since May 2018 and are up this year 11% from the same period a year ago to $2.51 million.

• Collections of the city’s road repair sales tax in May fell 1.4% from May 2018 to $4.54 million but this year remain up 4.1% from the same period last year to $22.1 million.

• Use tax revenue in May fell 16.5% to $546,005, the third drop in the past four months, and is down 5.8% this year to $3.6 million.

Contact Wayne Heilman 636-0234

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