Despite anecdotal reports of a vigorous sales month in June, Archuleta County and the Town of Pagosa Springs experienced a 2.41-percent decline in sales tax revenues relative to the same month last year.

The report, released by the Colorado Department of Revenue late last week, indicated a local economy creeping back into recovery. Year-to-date, sales tax revenues are down 4.79 percent, but that decline is a marked improvement from the start of the year. In fact, 2010 started with sales tax receipts down 12.83 percent and June’s year-to-date figure marks the first time this year that cumulative sales tax collections have dipped below a 5-percent decrease from the previous year.

Nonetheless, the news is not as good as local officials had hoped and, relative to 2008, the sales tax indicator continues to suggest a sagging local economy. Compared to June 2008 sales tax revenues, this year was down 10.4 percent; while averaging June receipts from 2008 and 2009 show receipts for this year down 6.6 percent.

The best news was in the manufacturing sector — accounting for about 4 percent of local sales tax revenues in 2010 and arguably one of the area’s fastest growing economic drivers — showing receipts way up from previous years: 59 percent from 2009 and up 28 percent from the previous five-year’s average. It should be noted that the $32,555 collected in June 2010 for manufacturing was, by far, the most ever collected for that sector.

Likewise, the accommodations/restaurant sector (accounting for about 18 percent of sales tax revenues in 2010), was up 23 percent for sales tax receipts relative to the same month last year. Across the previous five-years’ average, sales tax receipts for accommodations and restaurants are up 11 percent from January to June 2010.

That increase mirrors what the Town Tourism Committee is reporting for lodger’s tax. On Tuesday, the TTC released revised lodger’s tax figures, reporting that those receipts showed a 14.35 increase in June, relative to the same month last year, and that year-to-date receipts are up 11 percent over the same period in 2009.

Pagosa Springs Town Manager David Mitchem expressed disappointment in the June sales tax figures, stating that he believed the numbers of tourists in town during June would show positive sales tax growth for the month.

“Because of all the people in town, we thought we’d see a real bump in the sales tax numbers,” Mitchem said.

“They’re staying here, they’re just not buying much,” he added.

Archuleta County Administrator Greg Schulte also expressed surprise at June’s numbers, saying, “It seems a little odd that we’re down in 2010 considering we had two huge bicycle events. If we hadn’t had those two events, we’d be down much worse for the month.”

In fact, retail sales have been down this year, gauged by sales tax collections. Accounting for about 15 percent of the local economy (according to a 2009 Region 9 report), tax receipts for retail sales were down 11 percent from June 2009 and down 16 percent from the previous five-years’ average.

Mitchem also acknowledged that the virtual standstill in construction throughout the county has hurt the local economy in a number of ways. According to the June report, sales tax collections for construction fell 28 percent from the same month last year and was down a full 69 percent compared to the previous five-years’ average — by far, the hardest hit sector in Thursday’s report.

The numbers are instructive in showing that the construction sector, accounting for about 15 percent of the local economy in 2007 (according to the 2009 Region 9 report), amounted to just over 1 percent of the area’s economy from January to June of this year.

Schulte was surprised by the June sales tax figures for construction, stating that for the county, “Building permits are on track this year compared to last year.”

In fact, according to Archuleta County Building Department Permit Technician Sherrie Vick, 76 building permits were pulled in the county through June (with 16 for new construction of single-family homes) compared to 74 during the same period last year.

However, the town has shown a significant drop in building permits pulled through June of this year, with just 14 permits pulled (none for new construction) compared to 20 permits during the same period in 2009 (one of which was for mixed-use new construction).

Of course, declining construction in Archuleta County has a farther reaching effect than just declining sales tax revenues. With fewer construction jobs available, driving local unemployment, significantly fewer workers have money to spend at local businesses as they scramble to pay for necessities — rents or mortgages, utilities, car payments, etc. — and less to spend in restaurants or retail establishments.

Given the unexpected drop in sales tax revenues for June, Mitchem stated that he believes the Pagosa Springs Town Council will continue to remain with a 15-percent reduction from 2008 expenditures. Although the town’s budget policy would suggest a return to a 10-percent budget reduction (due to tax revenues down 4.79 year-to-date), Mitchem stated that uncertainties with the national economy would most likely convince council to continue on its current path of austerity.

“I think the council has made a good decision on staying with a 15-percent reduction,” Mitchem said. “We can stay with that for a month or two and see what happens.”

Mitchem was correct in deferring to uncertainties of the national economy as a policy guide for the town. With national unemployment stuck at 9.5 percent and banks seemingly unwilling to free up credit for businesses, many analysts fear the country’s economy is on course for a sluggish recovery at best, a so-called double-dip recession at worst.

Although President Obama announced yesterday his intention to push a small business stimulus program — including $30 billion for loans to small businesses (to be administered through local banks) and an additional $12 billion in tax breaks for small businesses — it remains to be seen if the president’s proposal will make it through Congress, much less if it will provide a badly-needed boost for employment or economic growth.

What is clear is that the local economy, while appearing to be slowly leveling out from the past few months, continues to decline from a period of steady growth in 2007 and 2008. With local unemployment officially at 9.1 percent (but most likely much higher when factoring in discouraged workers, marginally attached workers and part-time workers desiring full-time employment), construction at a veritable standstill and local businesses continuing to close (see related article, Page 1), an economic turnaround in Archuleta County remains elusive and frustrating.

jim@pagosasun.com