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Sales tax up, no windfall

Staff Writer

The monthly sales tax report generated quite a bit of excitement amongst the staff at Pagosa Springs Town Hall after it came out last Thursday.

Sales tax revenue for the month of October totaled $615,555.35, an increase of $119,854.25 or 24.2 percent over October 2012, according to a report from LeeAnn Foutz from the Archuleta County Finance Department.

“That can’t be right,” Mark Weiler responded when parks and recreation director Tom Carosello mentioned it. Weiler had attended a special session of town council concerning the proposed community rec center and was sitting just outside of the council chambers waiting for an executive session to end when Carosello walked by and broke the news. “There must be some glitch.”

Carosello suggested checking with town manager David Mitchem, which SUN staff subsequently did.

Further investigation revealed revenue generated by retail trade — the largest portion of Archuleta County’s economy — went from $233,266 in 2012 to $334,539 in 2013, an increase of $101,273 or 43.4 percent.

While the extraordinary monsoonal rains created devastation along Colorado’s Front Range near the end of September, and the snow didn’t really start to fly in Pagosa Country until November, October remained fairly mild in terms of the weather.

In addition, the only really big local event in October was the Makers Expo and Tour. Could the nice weather or the interest surrounding local arts and crafts production account for so much extra sales tax generation?

More digging showed that the retail trade sector is broken down according to the type of trade, and the report showed $189,207.22 worth of sales tax was collected by grocery stores in October 2013, an increase of $93,621.55 or almost twice as much as last year.

Mitchem later confirmed the sales tax report was accurate and directed SUN staff to town clerk April Hessman, who explained the spike.

According to Hessman, large corporations such as Kroger’s pay taxes every four weeks instead of every month, which means they make 13 payments  per year instead of 12. It just happened to work out this year  that the taxes from City Market came due twice in October — once at the beginning of the month and once at the end.

In other words, the town was not the recipient of any unexpected windfall and the spike is a normal occurrence every year.

Sales tax revenue for October 2012 was $495,701 and for 2011 it was $494,830, which makes the average $495,266 for the same period over the last two years. Consequently, this month’s figure of $615,555 is above the two-year average, up $120,289 or 24.3 percent.

The total amount of sales tax for the month is split 50-50 between the county and the town of Pagosa Springs. If the town’s share had shown a 5-percent drop or more, Town Manager David Mitchem would have been required to take emergency action to reduce the town’s spending.

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. Year to date revenue is still up by 6.53 percent when compared to this time last year.

Breaking the rest of the sales tax report for October down by sector, the second largest portion of Archuleta County’s economy — accommodations and food service — generated $84,839 worth of revenue, an increase of $4,729 or 5.9 percent compared to 2012.

Town Tourism Committee director Jennie Green’s report for today’s town council meeting showed that lodging tax revenues were $31,332 for October, an increase of $3,849 or 14 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 $3,518 worth of sales tax revenue, an increase of $1,437 or 69 percent over last year.

Utilities companies contributed $44,015 in October, which is $7,298 or 19.9 percent more than last year. The construction industry also showed significant gains, rising from $13,326 last year to $15,022 this year, an increase of $1,696 or 12.7 percent, while real estate and rental revenue dropped 22.8 percent to $9,065.

Wholesale trade rose by 19.9 percent to $33,977 in October. However, the manufacturing sector only garnered $30,561, and the mining industry brought in $8,055, so both industries remaining almost flat over the year.

ed.fincher@pagosasun.com

This story was posted on December 19, 2013.