Colorado Springs sales tax collections show improvement

Colorado Springs’ October sales tax collections were the highest since January and saw the smallest year-over-year percentage decline since May 2008.

The city brought in $9.16 million in sales taxes, reflecting purchases made in September, the city’s Financial and Administrative Services Division reported Tuesday. That was down 0.82 percent from October 2008.

Although the year-over-year number was down, there are signs that the economic recovery may be taking root: Tax receipts from clothing stores shot up 30.5 percent, sales tax from grocery stores was up 13 percent, and tax collected from department store sales rose 8 percent.

Chris Sondermann, who owns the downtown boutique Terra Verde, said she’s seen more shoppers and sales since September.

“I feel like we’ve kind of come alive again,” she said. “We’ve had more traffic and our store has felt livelier.”

Fred Crowley, senior economist for the Southern Colorado Economic Forum, said the numbers are exactly what you’d expect as the region begins to emerge from the recession and consumers stop postponing purchases and start breaking out their wallets.

“These are the things that come out of it first, the essentials,” Crowley said. “At some point, everything wears out.”

More than half of the city’s general fund revenue comes from sales and use taxes, which are levied on manufacturing equipment, building materials and other goods bought outside the Springs. Terri Velasquez, the city’s chief financial officer, said October’s improving trend won’t be enough to change the city’s bottom line.

“We are still down and until we see things level off and start to return to higher sales tax numbers, it really doesn’t impact the 2010 budget at this point,” she said. “The last 16 out of 18 months have been declines, and we’re still continuing to decline.”

October was still a rough month for many retail sectors. The steepest sales tax declines came from furniture, appliance and electronics, down 27.8 percent and building materials, off 15.4 percent.

Dave Bamberger of Bamberger and Associates, a local economic consulting firm, cautioned that recovery is likely to be a lengthy process.

“All of the economic indicators say that we’re at the bottom and we’re on the slow path toward recovery,” he said. “We’ve got a long way to go to climb out of the hole the local economy is in.”

So far this year, combined sales and use taxes are down 8.3 percent compared to the same point in 2008.