April Sales Tax Increased 7.7%

Collections of sales tax for the month of April totaled $339,040, an increase of $24,101, or 7.7%, from April 2014.

Each month, City staff updates a sales tax trend report. It provides data about sales tax, the most important revenue source for government operations, and includes other general fund highlights. The report can be accessed at a “quick link” on the home page or through the financial documents page. Monthly, the City Treasurer presents a report about sales tax to the council during a regular meeting. Because so much attention has been focused on sales tax recently, the report will also be published as a report on our website.

Of the total city sales tax revenue collected in April, $184,099 (54.3%) is now restricted for capital spending, and $28,140 (8.3%) is restricted for maintenance, routine repair and upkeep of the City’s streets, sidewalks, curb, gutters, etc. according to the newly approved ordinance No. 2014-28. The unrestricted portion of the city sales tax is $124,428 (36.7%).

Year-to-date sales tax collections of $1,374,863 are $151,834, or 12.4%, greater than the same period in 2014.

The April 2015 sales tax collected by businesses engaged in retail trade, which comprises approximately two-thirds of Salida’s total sales tax, increased 14.9% compared to April 2014. Within the retail sector, sales tax reported by automotive vendors increased 45.8% compared to April 2014.  The next largest industry group is restaurants with nearly one-sixth of the total; this group of businesses increased 3.2% in April. Sales tax collected by hotels, motels and vacation rentals decreased 4.4% in April. As a percentage of total collections, the lodging industry only accounts for about 5%; however, this group is also an indicator for the level of tourism that brings spending in other sectors, as well.

Salida’s share of the Chaffee County tax for April was $103,699, an increase of $1,012 or 1.0%. Year-to-date disbursements of $435,139 are $40,948, or 10.4%, greater than the same period in 2014. Chaffee County’s 2% sales tax is shared with the three municipalities within the county under a long-standing intergovernmental agreement. The allocation is based on motor vehicle registrations throughout the county, yielding Salida approximately one-quarter of the county tax. Businesses located in the Salida city limits collect just over half of the county tax.

Sales tax is the most significant source of revenue for government operations. Salida relies more heavily on sales tax than other Colorado municipalities according to data compiled by the Department of Local Affairs. In 2008, voters repealed the property tax in favor of an additional 1% sales tax to pay for the operation, maintenance and improvement of streets and other infrastructure. This changed Salida’s total sales tax from 2% to 3%, and provided substantially more funding both for streets capital improvement projects and maintenance activities, specifically for operating expenditures of the public works organization to maintain streets and other infrastructure. The re-allocation of these funds was the subject of a recent special election, and now 75% of the 1% sales tax can only be used for capital improvements of streets, taking those funds from the operating budget.

For the fiscal year ended December 31, 2014, City sales tax reached $4.4 million, a cumulative increase of 28.3% since 2009. For that same period of time, from 2009 to 2014, the City’s general fund operating expenditures increased by 15.6% to $5.0 million. As you can see, the increase is much lower than the growth in revenue over the same time period. Cash reserves in the general fund have nearly tripled from $1.2 million at the end of 2009 to $3.5 at the end of 2014.

Please review the Sales Tax Trend report for further details. City staff strives to provide information that serves to educate and engage its constituents. Your questions and suggestions are always appreciated.

Jan Schmidt, Finance Director