Sales tax revenues up in February, expected to ‘crash’

By John Finefrock
Staff Writer

February sales tax revenue for the town and county is 22 percent higher than February of last year, but local officials expect those revenues to “crash” beginning in the second half of March due to the COVID-19 pandemic.

“It’s obvious that many, if not most, categories of local Sales Tax revenue will crash in the second half of March, all of April, and probably May as well,” wrote Archuleta County Finance Director Larry Walton in an email to The SUN, adding, “I’m ‘speculating’ that Sales Tax will be down 27.5%… the middle of what looks like the range of possibilities.”

Walton wrote that 23 percent of the county’s total government revenue is from sales tax.

“The bigger problem for our County government will be the recession that has just begun. It will affect almost all 300+ revenue streams of the County, and will likely last for a long time. It will be months before its impact comes into focus. We will make assumptions in the mean-time, but a lot of those assumptions will turn out to be wrong. Fortunately, we have a substantial Strategic Reserve. In the event that our assumptions about revenue were too high, the reserve will cushion the blow to our bottom line. It is our defense against uncertainty,” Walton’s email reads.

In an email, Pagosa Springs Town Manager Andrea Phillips wrote that the town has a few models of how much sales tax revenue could fall.

Town staff have reported to the town council they estimate about a 27 percent dip in sales tax, though Phillips noted in her email there is one model that projects a 75 percent loss in sales tax revenues in April, May and June.

Phillips wrote that sales tax revenue makes up 77 percent of the town’s General Fund and 60 percent of the capital fund.

At the county commissioners’ work session on Tuesday, the commissioners briefly talked about potential lost sales tax revenue and that budget cuts might be on the horizon.

“If April’s completely gone south, we’re gonna have to make deep cuts,” said Commissioner Steve Wadley. “We can’t wait. If we get an inkling from the April sales tax how bad it’s gonna be, we’re gonna have to start right then doin’ what we gotta do to pocket that money.”

The February sales tax report for Archuleta County, disseminated by Walton, shows a 22 percent, or $155,759, revenue increase compared to February of 2019.

Walton’s report notes “Since March 2020 data has not yet been received, the effects of social distancing are not reflected.”

The gross amount of the February sales tax revenue is $861,386.77. The town’s share is $430,355.89 and the county’s share is $431,030.88

The town and county split sales tax revenue evenly; the difference between the two amounts is a transfer made for aviation taxes.

“Comparing Year-to-Date 2019 to 2020 data, 2020 was 20.7% ($300,883) higher than 2019,” wrote Walton.

The sales tax report indicates that the following categories have increased revenue compared to year-to-date data from the same time period in 2019.

• Retail is up 22.5 percent, or $178,594.

• Accommodation/food service is up 15.5 percent, or $37,204.

• Miscellaneous is up 22.4 percent, or $50,486.

• Manufacturing is up 12 percent, or $6,379.

• Professional services is up 214.7 percent, or $8,078.

• Other services is up 38.5 percent, or $7,280.

• Real estate/rental is up 2.3 percent, or $953.

• Construction is up 37.8 percent, or $9,624.

• Information services is up 4.5 percent, or $2,168.

• Finance/insurance is up 6.2 percent, or $119.

No sales tax categories were down or lower than compared to year-to-date revenue from last year.

 

This story was posted on May 9, 2020.