Colorado sales tax revenue nosedives to start 2009
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.
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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.