City sales tax collections jump in April

Colorado Springs sales tax collections in April rose by the largest percentage since October, increasing 7.85 percent from the same month a year earlier, the city reported Wednesday.

Sales tax collections have now posted year-over-year gains for 18 consecutive months, but gains had dwindled in recent months and were less than 1 percent in the previous month. Collections so far this year are up 4.46 percent from a year ago. But despite the April gains, collections are still down 6.74 percent from peak levels in 2007.

April collections reflect purchases made in March. The gain comes as the Springs area unemployment rate fell in March by the greatest percentage in more than 10 years, from 10.2 percent in February to 9.7 percent.

Analysis: Fred Crowley, senior economist for the Southern Colorado Economic Forum, attributed much of the gain to new vehicle sales, which are up 17.2 percent so far this year to 5,345, according to new vehicle registrations filed with the El Paso County Clerk and Recorder’s Office. New vehicle registrations in March were up 40.6 percent, the biggest monthly increase in 5½ years.

Crowley is worried that rising gasoline prices will erode increases in sales tax collections in coming months.

“The April increase is good and welcome, but may not be sustainable,” he said. “People aren’t getting raises and are spending more on gas, so they will have to cut spending elsewhere.” 

Use tax: Use tax collections fell 6.02 percent  in April from a year earlier, but the decline would have been much larger without one-time audit revenue. Without those funds, use tax collections would have declined 23.25 percent from a year ago. Use tax collections so far this year are down 27.73 percent from a year ago.

Use tax is collected on manufacturing equipment, building materials and other items bought outside the city for use in the city.

Combined sales and use tax collections in April were up 6.83 percent from a year ago to $10.55 million and are up 1.68 percent so far this year.

Why it’s important: Sales and use tax collections fund more than half of the city’s annual budget for police and fire protection, roads and other services. Sales tax is also a primary measurement of consumer spending, making it a key barometer of the vitality of the local economy.

The breakdown: Categories showing the greatest increases in sales tax collections in April were commercial machines, up 28.16 percent from a year earlier, and grocery stores, up 11.66 percent. Among the largest categories, collections from department and discount stores were essentially flat, up 0.78 percent, while restaurants were up 8.42 percent and miscellaneous retailers were up 9.63 percent. Three categories showed decreases: business services, off 18.33 percent; auto repairs and leases, down 2.81 percent, and utilities, off 1.49 percent.

Medical marijuana: Sales tax collections on medical marijuana businesses in April more than doubled from a year earlier to a record $62,663, breaking the previous monthly record set in January. Collections from medical marijuana sales so far this year are more than double the same period a year ago at $167,749.

Tourism tax: April’s collections of the city’s tax on hotel rooms and rental cars were up 8.49 percent from a year earlier.
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