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Sales tax revenue continues to grow, local governments agree not to ask for 1-percent increase

The idea of asking Archuleta County voters for a 1-percent sales tax increase on this November’s ballot may have finally been laid to rest, but at a joint work session between the Pagosa Springs Town Council and the Archuleta County Board of County Commissioners held Tuesday morning, neither side was willing to commit to a stance on possible tax increases in the future.

Commission chair Clifford Lucero started the work session by referring to an agreement the two bodies had reached previously, and then to a SUN article describing the subsequent town council meeting. He admitted that while no formal decisions can be made during a work session, each body had verbally agreed to go back to their respective regular meetings and discuss the issue where possible votes could take place.

“I’m sure it was because of how I was quoted in the paper,” council member Kathie Lattin responded, “that a lot of people got what it was. Greg (interim town manager Greg Schulte) brought a resolution before the town council, and because of what was in there I was really upset.

“I felt that if we put in writing that the town would not ask for a sales tax increase for two or more years, I didn’t feel that was right. We had an agreement that we weren’t going to put anything on (the ballot), but you never know in a year and a half or two years what’s going to come before us, and I didn’t feel like it was in the best interest of the town to say we are never going to put something on the ballot for two years.”

Lucero clarified that there was no need for a formal written agreement; a mutual understanding was enough. Mayor Don Volger added that the idea to do a formal town resolution promising not to put a sales tax question on the town’s ballot for two years was his idea, not the commissioners’. Commissioner Michael Whiting added that as long as the town and county continue to work closely together and improve lines of communication, there is no need for formal agreements.

“We have projects that we have planned and have started in some instances,” council member Tracy Bunning said, clarifying that he was referring just to the town, not the county, “and we have fallen into this pattern of trying to finance those solely with grant money. Every grant cycle that comes up, we apply and we’re not successful, and the projects just sit there waiting for this manna to fall on us and enable us to go forward with these projects. That’s something we need to change.”

Bunning pointed to the Town-to-Lakes Trail as an example. The plan all along has been to make it a hard-surfaced trail, either concrete or asphalt, but Bunning argued it could be completed at a much lower cost and without the need to wait on grants if it were done as a soft-surface trail, either gravel or dirt.

Bunning argued that this project is in the best interest of a number of groups besides the town and county, including the Pagosa Lakes Property Owners Association, and if there was some financial cooperation between all interested parties, a significant amount of the project could be completed within 18 months.

Whiting agreed both governments would need to look inward and figure out how to cut costs by becoming more efficient before they looked outward and asked the voters to approve a tax increase.

In the end, volunteers from both the town and county boards formed a subcommittee to work on language for a straw-poll question for the November ballot. This question would just ask voters for their opinion on whether or not they would support a sales tax increase. The question would not actually institute a sales tax increase if the voters said “yes.”

Although he didn’t mention it at this week’s meeting, council member David Schanzenbaker has argued all along that there is no need to raise taxes when the reserve funds in the town’s budget are already flush and the sales tax the town currently collects continues to show steady growth.

This month’s sales tax report seems to back up Shanzenbaker’s opinion.

May sales tax revenue received last week totaled $531,304.46 — an increase of $29,693.04 or 5.29 percent compared to May 2013, according to a report from Archuleta County Finance Director Larry Walton.

All sales tax generated within the county, regardless of whether it comes from a business within town limits or not, is split evenly between the town and county, and although the town will soon be receiving its half of sales tax revenue directly from the state, according to Walton, the monthly reports will still go to him and he will disseminate the information to the town.

Sales tax revenue for May 2013 was $504,611 and for 2012 it was $474,204, which makes the average $489,408 for the same period over the last two years. Consequently, this month’s figure of $531,304 is also above the two-year average, up $41,896 or 8.6 percent.

Similarly, sales tax revenue for April 2013 was $403,711 and for 2012 it was $426,994, which makes the average $415,353 for the same period over the last two years. Consequently, last month’s figure of $434,189 is also above the two-year average, up $18,837 or 4.5 percent.

Finally, sales tax collections for March 2013 were $532,221 and for 2012 they were $485,810, for a two-year average of $509,016, which means the previous month’s revenues totaling $586,754 were $77,739 or 15.3 percent higher. In other words, business is booming.

So far this year, February has been the only month to see a decline in sales tax revenues when compared to the average for the previous two years and year-to-date revenue is up by 4.1 percent when compared to this time last year.

Breaking the sales tax report for May down by sector, revenue generated by retail trade — the largest portion of Archuleta County’s economy — went from $231,746 in 2013 to $242,594 in 2014, an increase of $10,848 or 4.7 percent.

The second largest portion of Archuleta County’s economy — accommodations and food service — generated $98,159 worth of revenue, an increase of $11,330 or 13.0 percent.

On a related note, Town Tourism Committee Director Jennie Green reported to town council last week that lodgers’ tax revenue for May, which is collected above and beyond the regular sales tax, totaled $32,631, which is $5,689 or 21.1 percent higher than 2013. For the last year, only three months have failed to set record highs for lodgers’ tax collection.

Arts, entertainment and recreation — another sector of the local economy largely controlled by the flow of tourism — brought in $4,270 worth of sales tax revenue, an increase of $1,457 or 51.8 percent when compared to last year.

Utilities companies contributed $50,502, which is $5,171 or 11.4 percent more than last year, and the construction industry rose from $13,372 last year to $13,841 this year. Real estate and rental revenue, however, fell to $7,316, a decrease of $1,671 or 18.6 percent.

Wholesale trade fell by 2 percent to $28,267, and manufacturing went from $31,825 to $31,048 over the year, while the mining industry garnered $4,040, an increase of $620 or 18.1 percent.

The information industry brought in $24,287, a decrease of $3,889 or 13.8 percent, and scientific and technical services generated $1,917, which is $1,149 or 37.5 percent less than the previous year. Educational services and health care were also down.

Waste management collected $8,539, an increase of $4,953 or 138 percent, and finance and insurance also rose from $1,017 to $1,111 over the year.

This story was posted on July 24, 2014.