City's sales tax collections fall further; consumers slow big purchases

Colorado Springs sales tax collections fell in September for the fourth consecutive month and the seventh time in eight months as consumers slowed purchases of big-ticket items such as homes, vehicles, furniture and appliances.

September sales tax collections, which are from sales in August, declined 5.81 percent from a year earlier to $9.16 million, the city Finance Department reported Friday.

Collections have been down from the same month a year earlier every month this year but May. That matches a similar drop in seven of eight months between December 2002 and July 2003, when the local economy was in the midst of a previous recession.

Overall, sales and use tax collections in September were down 5.66 percent from a year ago to $9.95 million. Use tax collections last month on manufacturing equipment, building materials and other items bought outside the Springs fell 3.86 percent from a year earlier. This year, overall collections are down 3.97 percent from a year ago, making a decline in annual collections from the previous year likely for the first time since 2003.

The report comes about 10 days after the city announced a second round of job cuts that will come in January. The city's 2009 budget assumes the elimination of 90 jobs, including 28 announced in early September and 62 more on Sept. 29, of which 55 were filled. The cuts are designed to save the city between $4.8 million and $6 million a year and are needed to help bridge a $23 million budget shortfall next year.

The September collections included $313,537 in one-time revenue from auditing merchants. Without the audit revenue, sales tax collections were down 8.24 percent, use tax collections were off 4.4 percent and overall collections were down 7.94 percent.

When audit revenue is subtracted for the year-to-date totals, sales tax collections were off 4.23 percent, use tax was down 11.1 percent and overall collections were off 4.74 percent.

WHY IT MATTERS: The city funds a majority of its services through sales and use tax collections. City officials have estimated sales and use tax revenue this year will fall $8 million short of the $127 million anticipated in this year's budget.

DETAILS: The biggest declines in September sales tax collections were in building materials, down 19.32 percent; furniture, appliances and electronics, down 10.84 percent; and from auto dealers, off 9.58 percent. The biggest gains were from clothing stores, up 6.38 percent; for auto repairs and leases, up 6.26 percent; and from miscellaneous retailers, up 5.79 percent.

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Contact the writer: 636-0234 or wayneh@gazette.com