City sees drop in building use tax

Decline is sign of rapid decrease in local construction

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— Sales tax for 2002 is down .83 percent from the previous year, but the biggest loss in city revenue came from a decrease in the building use tax.

The building use tax, which is imposed on new construction, dropped by more than 50 percent this year and brought in $700,000 less in revenue. In 2001, the city collected $1.3 million through the building use tax; in 2002, that number dropped to $599,000.

The decline in the building use tax is one more sign of a rapid decrease in construction within the city. In January, the Routt County Building Department showed a 41 percent decrease in construction valuation for 2002.

Steamboat Springs Chamber Executive Vice President Sandy Evans-Hall said Steamboat is not alone in the construction dropoff.

"Really, in terms of construction, it is down everywhere in the state," Evans-Hall said. "Every component of construction is really not doing well and Steamboat seems to be down quite a bit in terms of valuation."

The City Council voted during its October budget retreat to allocate the money from the building use tax solely for capital projects and to not use any of it for the city's operating budget. Building use tax collection did increase in November and December, but City Finance Director Don Taylor said reports for January and February show collections are down from 2002.

Sales tax fared better than the building use tax last year. Sales tax revenue collected in 2002 was only about $100,000 short of the 2001 total. The city collected $13.8 million in 2002.

All year, the year-to-date totals had wavered around 2001's collection numbers. A 2.64 percent increase in December was not enough to pull the year-end sales tax revenue ahead of 2001.

Revenue from the accommodation tax, which is collected based the number of rooms rented, was up by 6.4 percent in December.

Despite the increase in lodging, Evans-Hall said even if more tourists came to Steamboat, they did not spend as much money once they got here.

"I think it is signifying that people are holding back on their dollars. They are not spending as much in every category, whether it is retail, whether it is traveling, restaurants or lodging," Evans-Hall said.

"Every category is being hit right now, and for the remainder of the season, we will continue to see that."

Restaurants, liquor stores and sporting-goods stores did see slight increases in sales tax collection overall in 2002. Sales tax for restaurants and liquor stores went up by 2 percent and sporting good stores saw an increase of 6.4 percent.

Accounting for 68 percent of all sales, miscellaneous retail and lodging both dropped by .5 percent in 2002. Sales tax collection from utilities had the largest percentage decrease, going down by 12 percent.

The accommodation tax dropped by .32 percent in 2002, with $628,000 collected compared to $630,000 in 2001.

Geographically, the U.S. Highway 40 corridor and the mountain area outside of Gondola Plaza and Ski Time Square saw the largest growth.

The mountain area had a 4.6 percent increase in sales tax. In 2002, sales tax collection along U.S. 40 increased by 2 percent and brought in more than $4.3 million.

Evans-Hall said it is a sign of travelers tightening their belts and choosing lodging along U.S. 40.

"I would guess a lot of it has to do with the price of lodging," Evans-Hall said.

Regionally, sales tax dropped by more than 10 percent.

Across the state, Steamboat's year-end sales tax numbers are equal or slightly better than most other mountain towns. Among six mountain towns, Winter Park was the only one to have a higher sales tax collection than the year before with a 2.41 percent increase.

Aspen, Vail and Glenwood all saw sales tax decrease by more than 2 percent. Breckenridge saw a 1.46 percent decrease.

"We are doing as good or better than most towns," Taylor said.

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