The Colorado Department of Revenue (CDR) released a report last week showing November sales tax collections were up 9.54 percent over the same month last year, with year-to-date collections up 6.66 percent from 2010.
As reported in the Dec. 29 edition of The SUN, sales tax collections in 2011 have suggested a rebound in the area’s economy. The leading indicator for economic health in the county is based on monthly sales tax collections.
In fact, as of November, year-to-date collections this year exceed total collections for 2010 — the first time that has happened since 2005.
However, November’s report includes $48,094 in revenues from the Transportation and Warehousing sector, an area that has shown little or no collections over the past several years. This year, that sector has shown revenues for the months of May, June, September and November, accounting for $264,512 in total revenues and skewing reports for those months.
Nevertheless, even when subtracting out Transportation and Warehousing collections from 2011’s sum of year-to-date revenues, November’s year-to-date collections are still up 1.66 percent from the same time last year. Subtracting out those sector’s revenues from November collections show the month down 1.23 percent from November 2010 collections.
In looking at overall sales tax collections, Pagosa Springs Town Manager David Mitchem has called Transportation and Warehousing revenues “extraordinary collections,” electing to subtract out those dollars from sales tax reports and allocating that money to reserves.
“I still regard it as an audit and see it as unanticipated revenue,” Mitchem said last week regarding the CDR report.
Citing CDR rules for reporting and payment, Mitchem added, “Until I start seeing it (Transportation and Warehousing revenues) come in monthly, I will continue to regard it as unique income.”
While Transportation and Warehousing revenues have been reported in prior years (but not in 2010), those reports have been likewise sporadic and far from monthly. However, in prior years, those revenues have never broken a total of $50,000 in any given year — well below the $264,512 reported so far for 2011.
Although subtracting out Transportation and Warehousing collections for 2011 indicates a year just slightly better than last year and flat relative to the two-year average, the numbers indicate that the worst is behind the local economy, a sentiment also expressed by Mitchem.
“I think this indicates that we’ve hit bottom, that’s behind us, and we’re starting to see some stability,” Mitchem said.
Leaving Transportation and Warehousing figures intact for 2011 year-to-date collections shows a 5.28 percent increase over the two-year average for year-to-date collections.
The area’s fortunes and slight rebound in the local economy reflects the slight uptick experienced throughout the rest of the country.
Earlier this month, the U.S. Bureau of Labor Statistics reported that national unemployment dropped to 8.5 percent, the lowest rate in almost three years. That same report showed the fifth straight week of new unemployment claims below the 200.000 level.
Both figures were far better than expected, surprising many economic analysts. On the heels of that positive economic news, many of those same analysts revised Gross Domestic Product (GDP) projections upwards for 2012, from just over 2 percent growth forecasted for the year to nearly 3 percent growth.
GDP is a measure of how much money is spent within the national economy.
While that revised GDP forecast is seemingly good news, especially in light of almost uninterrupted dismal economic news reaching back as far as 2007, it’s a projection that indicates things need to be much better for the country to realize a comprehensive economic recovery.
Many analysts agree that GDP growth between 4 and 5 percent would be required for a significant improvement in unemployment. More than that, sustained growth at those levels would need several years before the nation’s jobless numbers return to what is called “full employment” — unemployment at 5 percent or below.
No doubt, the national economy will be a major topic during the months leading up to the November election. In fact, results from a Gallup poll released last week (posing the question, “What do you think is the most important problem facing this country today?”), 31 percent of respondents said, “economy in general,” followed by 26 percent saying “unemployment/jobs.” Only 8 percent responded, “Federal budget deficit/Federal debt.”
Results from that poll showing such far-reaching concern over the economy suggest that President Obama could face an uphill battle as he seeks reelection this year. On the other hand, continued positive economic news could deflate the GOP’s ability to leverage economic woes in an argument for change.
Positive economic news for Archuleta County will most likely not effect local elections this year. With three at-large seats open on the Pagosa Springs Town Council for an April election and two seats on the Archuleta Board of County Commissioners up for grabs during November’s general election, an improved economy will most likely not figure into decisions made by local area voters.
In fact, if local voters look at the economy in Pagosa Country, their reactions would most likely be similar to those of national voters — if the economy is indeed improving, it’s not nearly enough.