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Archuleta County sales tax revenue received in August 2013 for the month of June totaled $637,423.86, an increase of only $62.43 or .01 percent over June 2012.
However, the result is much better than expected, considering the West Fork Complex fires began in early June and closed U.S. 160 for the later part of the month.
Each month half the sales tax revenue goes to the county, while the other half goes to the town.
According to Resolution 2012-19, Pagosa Springs Town Manager David Mitchem must prepare a sales tax revenue analysis each month based on figures published by Archuleta County, which he presents to town council at its mid-month meeting.
Resolution 2012-19, a policy to enhance the financial stability of the town of Pagosa Springs, was passed by town council last December as part of the 2013 budget process. It was an extension of a system implemented in 2009 whereby town staff monitors the town’s sales tax revenue on a monthly basis, reporting fluctuations from the prior year’s and month’s revenues to the town council.
“In general, it is a means for us to be proactive,” town planner James Dickhoff explained at the time. “As we get the indication that we are seeing some reduced sales tax collections, we can react pretty quickly. We’ve instituted this policy over the last three years and it has worked very well for us.”
Sales tax revenue for June 2012 was $637,361 and for 2011 it was $641,333, which makes the average $639,347 for the same period over the last two years. Consequently, this month’s figure of $637,424 is only slightly below the two-year average, down $1,923 or .3 percent. If it had been a 5-percent drop or more Mitchem would have been required to take emergency action to reduce the town’s spending.
Section 3.9 of the Town of Pagosa Springs Home Rule Charter describes the town council’s authority and responsibility to anticipate revenues and adopt a balanced annual budget. In addition, Resolution 2012-19 lays out guidelines for the town manager as to when and how to reduce town expenditures:
“Whenever the percentage of sales tax revenues collected falls more than 5 percent below the average revenues collected for the same period in the preceding two fiscal years and the percentage of sales tax revenues collected in the previous month (or previous two months) falls 5 percent below the average revenues collected for the same periods in the preceding two fiscal years, the Town manager shall implement a 7 percent reduction in sales tax related expenditures.”
Sales tax revenue for May 2012 was $474,204 and for 2011 it was $541,750, for a two-year average of $507,977, which means the May 2013 figure of $504,611 is a decrease of only $3,366 or .66 percent. Sales tax revenue for April 2012 was $426,995 and for 2011 it was $369,793, for a two-year average of $398,394, which means the April 2013 figure of $403,712 is an increase of $5,318, or 1.33 percent. In other words, there is still no reason for the town to consider an emergency reduction of expenditures.
If any of those calculations had shown a decrease of 5 percent or more, Resolution 2012-19 would have kicked in. “Implementation shall include apprising department heads of the shortfall and working with department heads to conduct a review of all budgeted programs and services and categorize each into the following levels of service: 1) Essential Services; 2) Highly Desirable Services; and 3) Non-Essential services. The town manager shall initiate budget cuts or expenditure freezes eliminating Non-Essential Services based on their priority ranking. The town manager shall review departmental staffing patterns with primary focus directed toward reducing or eliminating part-time and temporary employment expenses. The town manager will determine which position will be filled on a case by case basis.”
The resolution goes on to describe even more drastic measures to be implemented in the case of a 10 percent reduction in revenue, and finishes up with what will happen if there is ever a 15 percent reduction in sales tax.
However, if any of these situations occurs and then is followed by two months of growth or recovery, the town manager is authorized to return to the original 2013 budget as approved by town council.
“Previously, we were free-writing budgets that were reductions from a full budget of five, ten or fifteen percent,” Dickhoff continued, “and then we would automatically implement those. This might be a little bit of a different strategy. As we deal with it (any possible reduction in revenue), we identify the important expenditures versus the non-important expenditures, and make those adjustments accordingly as we get that data in.”
So far this year, May and June have been the only two months to see a decline in sales tax revenues when compared to the average for the previous two years. Sales tax revenue for January 2013 was $477,510, an increase of $51,093.5 or 12 percent over the previous two-year average, for February it was $460,838, an increase of $58,621.5 or 14.6 percent, and for March it was $532,221, an increase of $58,712 or 12.4 percent.
Year-to-date revenue is still up by 5.18 percent when compared to this time last year.
Breaking the sales tax report for June down by sector, revenue generated by retail trade — the largest portion of Archuleta County’s economy — went from $287,247 in 2012 to $303,088 in 2013, an increase of $15,841 or 5.5 percent.
In addition, the second largest portion of Archuleta County’s economy —accommodations and food service— generated $128,651 worth of revenue in June, an increase of $14,974 or 13.2 percent compared to 2012.
Town Tourism Committee director Jennie Green also reported that lodging tax revenues were $44,148.14 for the month of June, an increase of $3,640 or 8.99 percent over 2012. The lodging tax is collected by hotels, motels and vacation rental properties, and is in addition to the normal sales tax charged by all other businesses.
Arts, entertainment and recreation — another sector of the local economy largely controlled by the flow of tourism — brought in $7,610 worth of sales tax revenue, an increase of $4,670 or 159 percent over last year.
Utilities companies contributed $38,751 in June, which is $3,139 or 8.8 percent more than last year, while the construction industry dropped 1.3 percent to $14,853 and real estate and rental revenue dropped by $3,710 or 18.5 percent to $16,316.
While wholesale trade rose by 3.2 percent in June to $30,353, the manufacturing sector only garnered $34,111, a decrease of $2,057 or 5.7 percent over 2012, and the mining industry fell by 81 percent to $6,263.
Of the remaining industry sectors, waste management and educational services showed modest gains, while transportation and warehousing, information, finance and insurance, scientific and technical services, health care and social assistance, public administration and other services all dropped slightly.