October sales tax revenues decrease

Steamboat Springs faces 2nd straight month of decline

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By the numbers

How sales tax revenues fared in 2008 compared to 2007.

January +5.95 percent

February: +7.29 percent

March: +5.06 percent

April: -1.78 percent

May: +6.07 percent

June: -.0.46 percent

July: +2.66 percent

August: +3.34 percent

September: -3.77 percent

October: -6.24 percent*

* Preliminary

Source: City of Steamboat Springs

— Preliminary figures for October sales tax receipts in the city of Steamboat Springs show a decline of 6.24 percent from October 2007, Finance Director Lisa Rolan confirmed Wednesday.

The city has not officially released its October sales tax report. Assistant Finance Director Bob Litzau said the city still is balancing figures and making sure there are no large businesses missing from the preliminary numbers. Litzau said he expects the official sales tax report to be issued by the end of the week.

"These are very preliminary numbers," cautioned Rolan, who has announced her resignation from the city, effective Jan. 5. "We still haven't finalized these numbers."

Sales tax decreased 3.77 percent in September. Rolan and Steamboat Springs City Councilwoman Cari Hermacinski said consecutive months of sales tax decline have been rare for the city in the past decade. Hermacinski said she has heard anecdotally that dismal sales continued for local businesses throughout November. However, several local businesses reported strong sales on Black Friday, the day after Thanksgiving kicking off the holiday shopping season.

There has not been three straight months of sales tax decline since 2002, when sales tax fell 6.98 percent in February, 1.91 percent in March and 4.77 percent in April.

Litzau said a big decrease in October is not as serious as it would be in other months. If the 6.24 percent decline holds up, it would mean a decline of about $80,000 compared to October 2007.

"It's generally not one of our bigger months," he said. "It's not as severe as a 6 percent decrease in December or January."

A 6 percent decrease would leave the city's year-to-date collections up 2.44 percent from 2007. The city budgeted for a 4 percent sales tax increase, but that was an increase from the amount budgeted in 2007. Since sales tax collections exceeded expectations that year, Litzau said the city is still on budget for 2008.

The town of Vail also reported declining sales tax revenues in October. Year-to-date, Vail is about 6 percent ahead of 2007's sales tax collections.

Hermacinski said the preliminary figures underscore her stance that the city is being too optimistic in projecting a sales tax decrease of only 4 percent in 2009 and that City Council should take a tough look at the 2009 budget early next year.

"I think it's my duty as a City Council person to prepare for the worst and hope for the best," she said. "This is a recession that nobody has ever seen on the council."

Litzau said he still is comfortable with the projected 4 percent decrease in sales tax collections for 2009. One reason, Litzau said, is because City Council has agreed to take another look at the 2009 budget early next year, when the city will have a better idea of where ski season sales tax collections stand.

Also, Litzau noted the city's urban renewal authority at the base of the Steamboat Ski Area takes more of a hit from sales tax decline than the city's general fund. This is because the URA is funded by a tax increment above a 2002 base level. For example, while September sales tax collections were down 3.77 percent, the decrease in the general fund's share was only 0.67 percent.

City Council President Loui Antonucci agreed that no immediate action needs to be taken. He said October may turn out to be the worst month of the current economic downturn and may not be indicative of what the city will see next year.

"I think this is a game that's evolving," Antonucci said. "The thing I don't want to do is have a knee-jerk reaction in January or February."

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