Collections of sales tax for the month of August were $440,899, a 7.9% increase from August 2013. Collections for the first eight months of 2014 total $2,957,800, which is an increase of $155,362, or 5.5% compared to the same period in 2013. Salida’s share of the Chaffee County tax for August was $146,256, an increase of 5.0%.
For the first eight months of 2014, Salida’s share of the Chaffee County tax totaled $959,496, an increase of $48,871, or 5.4%. Approximately half of the Chaffee County sales tax is generated within the City of Salida. Chaffee County allocates a portion of their tax to Buena Vista, Poncha Springs and Salida based on the ballot language approving the tax but keeps the majority for their operating needs.
August is tied with June as month with the second largest percentage of retail activity in the City. July is the largest with 10.9% of annual revenue, while June and August make up 10.0% each.
In light of recent discussions about the proposed 2015 budget and the allocation of “2A” funds, we thought it might be helpful to recap the current restrictions on sales tax.
Voter imposed restrictions limit the use of the majority (between 63.3% and 68.7%) of the City sales tax. All sales tax is revenue of the general fund and it is by far the most significant revenue source for general services of the City. Within the general fund, money for capital projects and purchases comes primarily from the city’s sales tax. (In addition to sales tax, grants obtained by staff supplement this revenue source and have been substantial over the past several years – over $10 million since 2009).
- Of the longer standing 2% city sales tax:
- 35% is transferred to a “Capital Improvement” reserve account and is used to provide streets and other capital improvements or to pay debt service on bonds or other obligations of the City issued to provide for such capital improvements
- 9% is transferred to a “Capital Expenditures” reserve account and used for the purchase of machinery and equipment that is greater than $500 with a useful life in excess of one year.
- 1% is transferred to an “Economic Development” reserve account to be used economic development within the City.
- Up to 8% is placed in a “Contingency” reserve in any calendar year when such fund is less than 15% of the City’s General Fund Operating Budget, it being the intent to maintain a Contingency Fund which, in any year, is equal to 15% of the General Fund Operating Budget. The Contingency Fund can be utilized by the City Council to cover unbudgeted, unforeseen reductions in revenue collections or unusual expenditures outside the scope of normal operations. The Contingency reserve is fully funded.
- In 2008, voters approved ballot issue 2A, an incremental 1% sales tax that is used for funding construction, operation, maintenance, and repair of roads and other public infrastructure of the City. According to accounting definitions, some of these types of expenses are considered capital while others are operating expenditures. Currently, 40% of the 2A revenue is used for projects that meet the accounting definition of capital spending and the remaining 60% is used for operations, maintenance and repairs of roads, sidewalks and other public infrastructure that is performed by the public works organization.
In total, 42.7% of the city’s sales tax is being directed to capital.
Because of the combination of these restrictions, Salida spends 30% or more of its total general fund budget on capital projects and purchases annually. This is two to three times as much capital spending compared to the average of other Colorado municipalities. This also means that the City of Salida functions with a relatively smaller portion of its total funding for the operating budget within the general fund.
Charts included in the packet for the last budget work session show the allocation of the 2015 proposed budget compared to other Colorado municipalities. And, this table shows the allocation of the 2014 year-to-date city sales tax collections.