Sales tax collections down 23 percent citywide
December 11, 2009
Throughout the years
Steamboat’s total October sales tax collections
Source: City of Steamboat Springs
Sales tax numbers
■ Total collections in October 2008: $1,244,023
■ Total collections in October 2009: $950,247
■ Percent change: minus 23.6
Category 2008 2009 Percent change
Misc. retail $785,073 $566,704 minus 27.8
Lodging $72,203 $55,352 minus 23.3
Sporting goods $43,689 $39,320 minus 10
Utilities $131,742 $117,091 minus 11.1
Restaurants $164,359 $131,041 minus 20.3
Liquor stores $46,959 $40,739 minus 13.3
Area 2008 2009 Percent change
Downtown $194,464 $156,166 minus 19.7
Base area $69,559 $61,022 minus 12.3
U.S. 40 corridor $548,660 $413,091 minus 24.7
Regional $165,757 $148,131 minus 10.6
West Steamboat $265,584 $171,837 minus 35.3
Source: City of Steamboat Springs
Steamboat Springs — City officials long had looked to October to potentially slow the fall of plummeting sales tax revenues. Instead, the month accelerated the nosedive.
Steamboat Springs sales tax collections totaled $950,247 in October, compared to $1,244,023 in October 2008. That's a 23.6 percent decrease — the largest monthly percent decrease this year. October sales tax revenues fell in every area and category compared to a year ago, including a 35.3 percent drop in West Steamboat and a 23.3 percent drop in lodging. The downtown area fell from collections of $194,464 in October 2008 to $156,166 in October this year.
"I was pretty shocked by the numbers, honestly," Steamboat Springs City Councilman Walter Magill said Wednesday. "Everybody thought we would see a 5 to 10 percent decrease. … I think the October numbers show, with the hunting decrease and the decrease in the local economy, the total decrease in local spending."
The numbers are surprising because during months of declining sales tax revenues, city administrators and staff have speculated that October 2009 would show less of a decrease because the economy was tanking in October 2008, creating what city interim Finance Director Bob Litzau has called an "apples-to-apples" comparison of two recessionary months. Numbers began to slide in September 2008, meaning the decline was in full swing by October last year.
This year, when sales tax dropped 20.4 percent in August, 20 percent in June and 21 percent in March, those months were compared to non-recessionary months in 2008.
Like Magill, city revenue supervisor Kim Weber said the October numbers surprised her.
"That percent decrease is higher than what I had expected — maybe it was wishful thinking," Weber said Wednesday. "I was hoping that October 2009 would be a smaller percentage down than the 23.61."
Kristi Brown, co-owner of the Cantina restaurant on Lincoln Avenue, said the October revenue numbers demonstrated to her that there were more factors than Lincoln Avenue road construction to blame.
"November and December have been pretty bad for us, as well," she said. "I think, at the time, I thought construction was having a big impact, but now that it's over, we're not seeing anywhere near the sales we were seeing last year. But overall, we're only down about 5 percent (for the year), and I'm thrilled about that."
Back to 2004
Decreases in sales tax revenue, the city's main source of funding, affect nearly all areas of the city budget. The city budgeted its general fund for an 18 percent dip in sales tax revenue this year.
Year-to-date, the city has collected $13,587,545 in sales tax, down 17.75 percent from total collections of $16,519,643 through October last year.
But the impact to the general fund is only about 15.9 percent less than last year, a difference attributed, ironically, to declining sales tax revenues at the base of Steamboat Ski Area.
When base-area sales tax collections exceed a baseline amount set in 2004, the city pays anything more than that amount to the Steamboat Springs Redevelopment Authority, to fund public improvements at the base area. Last year, base area revenues were about $371,000 more than the 2004 baseline, meaning the city paid that amount out of its general fund.
The city is making no such payment this year.
Weber said through October, the portion of the base-area managed by the city's Redevelopment Authority has generated $366,274 less than it did in 2004. That's a decline of more than $730,000 in base area sales tax collections in a year.
"That's a big number," Weber said.
The 15.9-percent impact to the general fund gives a little more leeway with the 18 percent threshold that could trigger reserve spending to balance this year's budget.
"As long as we aren't 20 percent down in the next two months, we should fall within our budget," Weber estimated Wednesday. She added that, loosely speaking, the city's sales tax revenues are "between 2004 and 2005 levels overall."
The city is budgeting an additional 10 percent decrease in sales tax revenue in 2010. Magill said that could be a "half-year budget," as the City Council will need to continually reassess whether it can end furloughs for city staff or reinstate benefits such as merit raises.
"We were budgeting about 10 percent down — that's 100 percent more," Magill said about October's 23.6 percent figure. "That's a surprise and a concern for … continued furloughs, merit raises and staffing.”