If history and recent trends are any indication, 2012 could provide a reprieve for area workers and businesses from years of recession and hard times.
In the final week of 2011, SUN staff analyzed three key indicators of the health of the local economy — sales tax collections, lodgers tax collections and unemployment statistics — and determined that trends shown in all three areas during the last half of the year suggest that 2012 may well show the way out from what many economists have dubbed a “mini depression.”
Sales tax figures have been provided by the Colorado Department of Revenue (CDR) and those numbers provide the best economic indicator for area conditions.
Unemployment numbers (not strictly considered an economic indicator) have been provided by both the Colorado Department of Labor and Employment and the U.S. Bureau of Labor Statistics (BLS).
Lodgers tax figures have been provided by the town of Pagosa Springs, through the Town Tourism Committee (TTC).
The start of 2011 showed a local economy in decline, with sales tax collections down relative to previous years and unemployment figures increased to record levels.
Unfortunately, late audits by the CDR appear to have skewed sales tax revenues in 2011, adding over $200,000 in additional collections, resulting in some difficulty with analyzing pure numbers from the past year.
Given that caveat, during the first half of 2011, sales tax collections were down 2.73 percent (subtracting audited dollars) compared to the last seven-year average for January through June collections. Furthermore, those collections were down 5.62 percent from when the economy took a dive, both nationally and locally (from 2008 until present).
The first half of 2011 is up 3.76 percent when dollars from the audits are included in a comparison against the seven-year average, up .9 percent compared against year-to-date collections averaged from 2008 through 2010.
However, the last four months of sales tax collections were up .72 percent compared to the average collections for the past last seven years, with the 2011 audited dollars included, and up 1.34 percent for the averaged collections during the recession years. When a September audit is subtracted from that four-month period, collections are down just a half percent from the same months’ average during the recession years and down just over 1 percent when those months’ collections are averaged during the past seven years.
Compared to average collections during that time frame in 2009 and 2010 (respectively), July through October average collections (minus audited dollars) are up 3.1 and 3.5 percent, up 4.95 and 5.35 percent when the September audit is left in.
Those numbers represent a positive trend in sales tax collections during the third quarter of this year, as well as for the first month of this year’s final quarter. Unless the county experienced a significant drop in local spending during November and December — anecdotal indications suggest the opposite — the last half of 2011 looks to have been pivotal in the turnaround for economic fortunes in the county.
The news gets better. Analyzing sales tax collections over the past seven years (and during the 2008-2010 recession) suggest that the upward trend during the last half of 2011 will continue into next year.
Since 2004, January through April sales tax collections in Archuleta have shown a consistency in two ways: The meagerest third of the year for receipts, but determined by the performance of the final two quarters of the previous year.
If 2011 tracks with trends exhibited over the past seven years (and assuming 2004 was not an anomaly — sales tax figures for prior years were not available as of press time Wednesday), those months in 2012 should not only outperform collections for the past three years, but match receipts for the best years (2006 and 2007) during that time period.
Furthermore, several imminent or potential projects should add more dollars into local coffers: Continued work on Lewis Street, revival of work on the town’s Riverwalk project (see related article), as well as additions to a joint town-county “Town-to-Lakes” project, the installation of the first greenhouse dome in Centennial Park and the possible construction of a large-format retail facility.
A final word on the latter project should be determined in early January.
While positive trends in sales tax collections bode well for the economic outlook in 2012, those receipts mean little to the area’s unemployed. Indeed, the past three years have been particularly tough in terms of unemployment numbers, reflecting trends on the state and national level, hitting record highs throughout.
However, local residents who are looking for work should be encouraged by the continued increase in sales tax collections since that upward trend will most likely result in jobs created to meet increased demands across most sectors.
In fact, unemployment has mirrored positive sales tax numbers, showing improvement during the last half of the year.
On track earlier this year to beat out 2010 as the worst year for unemployment in over 24 years, that trend took a surprising reversal last July, not only showing increasing numbers of local residents working, but also more local folks participating in the workforce.
As reported in last week’s edition of The SUN, unemployment figures for November, while still extremely high compared to the last 10 years, were nonetheless on track for the first time in 2011 to suggest that the year would finish with a yearly average better than last year’s average — 10.1 percent versus 10.2 percent for 2010.
Since July, unemployment numbers have been significantly better each month than the same months during last year, reversing a troubling trend for area workers looking for a job.
Again, historical trends suggest that 2012 could provide a brighter outlook for area workers. Furthermore, just as several pending and potential projects should boost sales tax revenues, those same projects will most likely increase the number of jobs available in the community.
Finally, lodgers tax collections (taxes paid on vacation rentals and condominiums, as well as hotel rooms and campsites) have continued to show improvement over the past several years — a singular bright spot during an otherwise dismal economic climate — but also reflecting positive trends in the other two indicators.
At the Dec. 15 mid-month meeting of the Pagosa Springs Town Council, TTC Coordinator Jennie Green presented numbers that were as impressive as they were positive, as far as a snapshot of the growth of tourism in the area over the past few years. After telling council that October 2011 had outperformed the same month last year in lodgers tax collections (a consistent trend over the last few years), Green reported that year-to-date collections in 2011 (as of October) had exceeded total collections in 2007 by $2,738.73.
An increase in lodgers tax receipts directly reflects an increase in visitors to the area. Furthermore, those visitors spend money in local stores and restaurants, boosting both the amount of sales tax collections and the number of jobs needed to host the visitors.
Accommodations and restaurants account for over 17 percent of sales tax receipts and, according to a recent report from the Region 9 Economic Development District of Southwest Colorado, accounts for 31 percent of wages earned in the county.
However, those jobs are the lowest paying jobs in the county.
Overall, services and retail sectors account for almost 80 percent of the economy in Archuleta County.
Clearly, numbers articulating boosts in sales tax receipts, employment and the number of visitors to the area suggest that 2011 will most likely finish on a positive note, especially when compared to previous years. Analyzing the trends that illustrate those boost suggest that 2012 will provide area residents with some badly needed room to breathe — and hopefully, money to spend.