Glenwood Springs sales tax revenues take a hit
Glenwood Springs, CO Colorado
GLENWOOD SPRINGS, Colorado ” People aren’t as quick to spend as they were before in Glenwood Springs.
Increases in sales tax revenues have slowed down. It’s unclear if the city will reach the amount of sales tax revenue it collected last year. Sales tax collections were up early this year by 1 to a few percent each month compared to 2007, but since June the amounts plunged below 2007 levels, and by as much as 3.88 percent below in September.
Nevertheless, the city collected 0.44 percent more sales tax this year through September than it did over the same period last year. And the amounts collected each month are still higher than 2006 levels and prior years.
“I would say any time your numbers are down there’s some concern,” said Glenwood Springs finance director Mike Harman. “Is it a panic? No. We don’t know where it’s going from here.”
The recession in the U.S. and the associated stock market plunge by roughly 40 percent since December 2007 undoubtedly has taken a toll on sales in Glenwood Springs.
“The national economy has tanked. That’s definitely had an impact,” Harman said. “People aren’t spending.”
The 3.7 percent sales tax is the city’s largest revenue source, representing nearly half the revenue in the city’s general fund.
Accommodations tax revenues from hotels and motels also aren’t increasing as fast as they had been.
Revenues early this year were 10 to 20 percent above last year. Revenue from five months starting in May was below revenue for the same individual months last year.
This year through September the accommodations tax revenue is only 0.47 percent above the same period in 2007. However, the total amount collected through September already beat the total 2006 figure. The 2.5 percent accommodations tax on short term lodging goes to a tourism promotion fund. It’s seen as an indicator of tourism activity along with sales tax.
Kate Collins, Glenwood Springs Chamber Resort Association’s vice president of tourism and marketing, told the City Council in September that even though this year isn’t like banner years with huge gains, people can feel reassured that tourism in Glenwood Springs is maintaining instead of declining despite national economic uncertainty.
Harman said spending cuts are the City Council’s decision, but so far no revenue projections or expenditures have been cut back for 2009. He said city officials would closely monitor the city’s funds and consider spending cuts if they become necessary.
The City Council recently voted to transfer a $125,000 subsidy from the street tax fund to the bus tax fund that pays for Ride Glenwood to avoid reducing its level of service or charging a fare. City Manager Jeff Hecksel said in a memo months ago that the bus tax fund operating deficit was due to declines in sales tax revenue associated with the economic downturn and also rising fuel costs.
Harman said the street tax fund has $13.4 million budgeted for 2009, so the $125,000 subsidy probably isn’t large enough to delay street improvement projects.
The City Council also agreed to revise a cost-sharing agreement to help pay for a projected funding deficit for the Glenwood Springs Rural Fire Protection District. The change shifts around $84,000 in cost to the city in 2009.
Fuel sales at the Glenwood Springs Airport are also “slightly lower” than the last two year average, but the airport fund was still making money after expenses, according to a third quarter report from the city finance department.
The city is finalizing a budget for the fiscal year starting in 2009. It was proposed with around $82.7 million in expenditures and fund transfers. The city had around $21.6 million in debt as of early November.
Contact Pete Fowler: 384-9121