Sales taxes bounce back in May

But city revenue from levy on building materials continues to lag behind 1999

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— Sales tax collections in the city of Steamboat Springs bounced back to near double-digit growth in May after absorbing a loss in April. But there are mixed messages about the status of the construction industry that has fueled Steamboat's economic growth the past two years.

In June, sales tax collections for May totaled $624,800, an increase of $56,330 or 9.9 percent over the same period in 1999. The final figure could still be revised upward as late collections come into the city finance department. The return to the positive side of the ledger was a change from April, when sales tax receipts dipped for the first time in 16 months, by 5.4 percent. The apparent anomaly in April was blamed by business leaders in part on a late Easter that sapped the final month of the ski season of its strength.

Although sales tax receipts in May returned to a pattern of growth, building use taxes declined for the fourth time in the first five months of 2000. Building use taxes are the equivalent of sales taxes on building materials. During May, they dropped by $1,200, a 1.2 percent decline from the $96,800 collected in May 1999.

The year-to-date collection of building use taxes in Steamboat this year is off significantly, from $609,589 through the end of May in 1999, to $323,184 by that month in 2000.

One local banker, who spoke on condition of confidentiality, said the trend in the city's building use tax should not be mistaken for a slowdown in the construction sector of the local economy. To the contrary, he said, construction lending, and real estate lending in general, are booming.

The finance department always publishes a disclaimer with its figures on building use taxes, noting that they tend to fluctuate wildly. And former City Finance Director Karen Feeney has pointed out that some of the larger construction projects that have been built here during the last two years have sometimes paid building use taxes in large sums that skew the figures for a given month.

Paul Clavadetscher, president of Community First Bank in Steamboat Springs said he believes building permits are a better measurement of the construction sector than are building use taxes.

"Construction has helped the economy tremendously," Clavadetscher said. "Can we continue to rely on construction and for how much longer? There are a lot of nice projects being built, but they don't replace a Steamboat Grand or a Hayden Power Plant."

Feeney has attributed record building use tax collections in 1998 and 1999 to a handful of large construction projects like the Steamboat Grand Hotel, the Yampa Valley Medical Center and other buildings on its campus, and the remodel and expansion of Steamboat Springs High School.

Clavadetscher said the impact of construction on the local economy goes beyond the actual value of the buildings themselves. Construction workers have increased demand for long-term rental housing and nightly motel rooms. Those same workers are spending money in restaurants and retail stores.

Sales tax revenue attributable to retail grew 14 percent in May and much of that growth was in west Steamboat and the U.S. 40 corridor. Again, Sandy Evans-Hall, executive vice president of the Chamber Resort Association, believes much of the retail growth is attributable to the construction dollar turning over in the economy.

"West Steamboat has a lot of building supply and hardware stores like True Value, BMC (West) and ACE," Evans-Hall said. "Sears is in west Steamboat."

The wild swings in building use tax are typified by the figures for March 1999 and March 2000. In March 1999 alone, the city collected more than $345,000 in building use tax. The rate of growth that month over the same period in 1998 was 605 percent. Building use tax receipts in March 1998 were just $49,000 the figure jumped by $296,384 a year later.

Building use taxes in 1999 totaled $1.57 million. In 1998, the total was $1.96 million. The total in 1997 was just $671,000.

In comparison to Steamboat, total sales taxes in Aspen were up 15.4 percent in May, but Vail was down 8.7 percent.

In terms of gross receipts, May is one of the four smallest months for sales tax collections in Steamboat. Still, the May numbers contributed to the city being up 7.7 percent year to date. Total sales tax receipts for the year now stand at $7.56 million.

To reach Tom Ross call 871-4210 or e-mail tomross@amigo.net

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