Colorado sales tax revenue nosedives to start 2009 |

Colorado sales tax revenue nosedives to start 2009

Kevin Flynn

Retail sales in Colorado fell 11.7 percent in February, measured by state sales tax returns filed in March.

A key indicator of how the consumer economy is functioning, receipts from Colorado’s 2.9-percent sales tax totaled $138.9 million last month. Retailers submit their returns monthly so the total essentially reflects consumer buying during the previous month.

That’s $18.3 million less than in February 2008.

As steep as the sales tax drop is year over year, it’s better than a month earlier, when post-holiday consumers held onto their wallets in January.

Sales tax receipts reflecting January retail activity, filed in February, showed a sharp drop from January 2008 and followed up a slow holiday shopping season. Sales tax from January was down 16.2 percent. That meant nearly $26.2 million less to run state operations in a single month.

Participate in The Longevity Project

The Longevity Project is an annual campaign to help educate readers about what it takes to live a long, fulfilling life in our valley. This year Kevin shares his story of hope and celebration of life with his presentation Cracked, Not Broken as we explore the critical and relevant topic of mental health.

In another indicator of the recession’s impact, Colorado’s income tax receipts ” payroll withholding and individual estimated payments ” were down even more.

Total individual income tax payments were down 17.4 percent in March, to $206.7 million. That’s nearly $43.5 million less than March 2008.

Corporate income taxes were off substantially in March, with $8.6 million net receipts after refunds last month compared to $48 million in March 2008. That’s a decline in state corporate income tax of 82.1 percent.

Sales tax is a leading indicator of the performance of a consumer-driven economy. The results show a deepening recessionary trend in spending. Comparatively, state sale tax receipts were down 7.5 percent in November and 3.3 percent in December, over the same months a year earlier.

For the entire 2008 calendar year, Colorado sales taxes dropped 2.2 percent from 2007. The first two months of 2009 reflect a year-to-date decline of over the 2008 drop of 14 percent, or $44.5 million less.

The bad news is that it’s almost equal to the entire 2008 decline of $46.2 million over 2007 – which took 12 months to accumulate.

Worse for state budget planners, the sales tax receipts were under the budget forecast, by 2 percent in February and 11.5 percent in January. Planners had projected a decline, but not enough. Coming in under forecast forces cuts to the state budget.

Colorado’s budget works on a July-June fiscal year, instead of a calendar year.

Support Local Journalism