Basalt’s sales tax revenues plummet 24 percent in July
September 17, 2009
BASALT – Basalt retail sales plummeted in July, dashing hopes by town officials that a homegrown stimulus program and summer tourist season would salvage a lean year.
Revenue from the town’s 3 percent sales tax fell nearly 24 percent for the month. Revenues fell to $301,627, from $394,737 in July 2008, according to a report by town Finance Director Judi Tippetts.
For the town’s fiscal year to date, which started in December, sales tax revenues are down 12.7 percent. A total of $2.22 million has been collected so far this year, compared to $2.54 million at the same point last year, the report says.
The town’s three biggest economic sectors took big hits in July. Retail food establishments, which include City Market, were down 10.25 percent in sales compared to July 2008. For the fiscal year-to-date, sales at retail food stores are down 3 percent. That category of businesses is critical to the town because it provides about 40 percent of annual sales tax revenues.
Tippetts said the drop in retail food sales may reflect a declining population in the Roaring Fork Valley. The recession has forced many consumers to reduce their consumption, but people have to eat so groceries were thought to be somewhat immune to falling sales.
Sales by Basalt’s restaurants with bars fell 29.4 percent in July. General retail was off 41.3 percent for the month.
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Town officials had already expressed disappointment after June that Basalt’s own stimulus program didn’t spur more business. The town funded a program that offered $30 gift certificates to shoppers for each cumulative $300 they spent at participating shops and restaurants.
By one measure, the program was a success. The town awarded 2,500 gift certificates and spent $75,000 to honor them. Despite that success, sales tax revenues fell 17 percent in June. Tippetts said she believes the program was worthwhile even if it didn’t keep sales on par with last year. Without the program, this summer might have been even tougher on shops and restaurants, she said.
Some observers remained hopeful that the outlook would brighten in July and August because summer is typically the busiest season in Basalt. Golfing and fishing attracts a lot of people to town. Tippetts said it is clear that sales tax revenues will come in significantly lower than expected for the fiscal year.
Basalt budgeted a decrease of sales tax revenues of 7.5 percent because of the recession. Tippetts now estimates the decrease will be double that amount. The town collects about 33 percent of its sales tax revenues in the last four months of the fiscal year, she said. If sales tax collections are down 20 percent over that period, annual sales tax collections will fall 15 percent from 2008.
That translates into fewer revenues for both the general fund and an open space fund. The town levies a 2 percent general sales tax and 1 percent for open space.
The staff and Town Council are just starting to work on the budget for fiscal 2010, so the implications of falling revenues aren’t clear yet. “We want to be pretty conservative,” Tippetts said.