Colorado Springs city sales tax revenues rose a modest 1.4% in December on a year-over-year basis, the smallest percentage increase in almost 2½ years, a new report shows.

Colorado Springs sales tax collections rose last month at their slowest pace in almost 2½ years, though city officials say the numbers remain historically strong and they’re not fretting about a potential revenue slump.

“We are not pressing the panic button,” said Charae McDaniel, the city’s chief financial officer.

A new Colorado Springs Finance Department report shows the city’s 2% tax on furniture, appliances, TVs, motor vehicles, building materials and other retail purchases generated $17.9 million in December, a 1.4% increase from the $17.7 million in revenue collected during the same month in the previous year.

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That percentage increase was the smallest since the city eked out a 0.09%, year-over-year gain in sales tax revenue in August 2020, past reports show.

On the one hand, the tiny percentage gain could signal that some consumers and businesses have slowed their purchases, McDaniel acknowledged. Revenues collected in December reflect spending that took place in November.

Still, she said she believes that last month’s slight increase is more likely a result of December tax collections being compared against an exceptionally strong revenue performance in December 2021, McDaniel said.

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If December 2022 collections were compared against the same month in 2020, when the city economy had seen a late-year rebound after the economic downturn triggered by the COVID-19 pandemic, they would show a 19.3% increase. When compared against December 2019, the latest sales tax revenues were up 29.3%.

“The tax revenue collected (in December) is still above what we had budgeted for in 2022,” McDaniel said. “We’re sitting in a good financial situation still with the city, and expect to end the year with very good financial data.”

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Sales tax collections are a critical revenue source for Colorado Springs’ city government because they pay for more than half of the city’s general fund budget. The general fund, in turn, helps pay for roads, parks, public safety and other basic services.

Economists and business leaders, meanwhile, also closely watch the city’s sales tax as a measure of the local economy’s health.

Other takeaways from December’s city sales tax report include:

• Through December, the sales tax generated $213.5 million, a 7.4% increase over the $198.8 million collected during the same period in the previous year.

• Some of the best-performing retail categories tracked by the city in December were utilities, with a 29.2%, year-over-year increase in revenues; furniture, appliances and electronics, up 22.3%; restaurants, 14.9%; and hotels and motels, 12.6%.

• Retail sectors with the largest year-over-year revenue declines in December were business services, down 70%; medical marijuana, 17.2%; and auto repair and leases, 11.9%. Building material purchases, a large tax generator, saw a 2% drop, likely because of a slowdown in home construction that housing industry experts have blamed on spiking mortgage rates.

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• Collections from the city’s use tax, which is levied on business purchases made outside Colorado Springs, totaled $688,247 in December, an 8.3% increase over the same month a year earlier.

Year to date, use tax revenues total $9.6 million, up 16% on a year-over-year basis.

• The city’s Lodger’s and Auto Rental Tax — a separate levy collected on hotel rooms and rental cars and an indicator of tourism activity — generated $558,718 in December, up 9.7% from a year earlier. Year to date, the LART tax, as it’s called, has generated $9.3 million, a 16.6% increase from the same period the previous year.

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