February sets new taxable sales record for Aspen | AspenTimes.com

February sets new taxable sales record for Aspen

Staff report

Aspen’s aggregate taxable sales were up 5% compared to February 2022, continuing the robust spending for the first month of the new calendar and fiscal year, the city’s finance chief reported.

February 2023 continues the winter season trend of economic activity, with 89% of spend taking place within local brick and mortar sales versus 11% from online/external businesses, underlining strong performance for the local economy, Finance Director Pete Strecker said.

As a reference point, February is typically 10% of annual taxable sales, putting it in the top third of months for economic activity, according to the report.

City of Aspen
City of Aspen

Diving into the industry level data slightly, the high dollar sectors for accommodations and restaurants/bars had elevated activity, posting 5% and 10% growth percentages over previous year’s performance, respectively. Lesser overall dollar valued sectors seeing increases were utilities and jewelry/gallery, up 11% and 108%, respectively. Finally, health/beauty was also up significantly, but that was mainly due to late payments being collected.

The remainder of the industries experienced small declines in taxable sales relative to February 2022. This can possibly be attributed to the comparison to February 2022 being such an incredibly high year in taxable sales, approximately 50% higher than any previous year, Strecker said.

Even with these small declines across many sectors, February 2023 still exceeded February 2022’s record-setting mark in aggregate taxable sales.

February sales and lodging tax collections paced 4.4% and 10.3% ahead of February 2022, respectively. These healthy growth figures reflect the strength of the local economy, but also somewhat are due to price appreciation that is driven by consumer demand, wage pressures and supply limitations, according to the report.

Focusing in on the lodging sector as an example, while occupancy remains relatively constant with pre-pandemic norms, nightly room rates are 225 percent greater than they were nearly a decade ago.

City of Aspen

February’s breakdown of the local lodging base reflects roughly two-thirds of taxable sales generated by traditional lodge offerings and one-third from short-term rentals (condo-hotels, investment properties and owner-occupied but rented units). These percentages and overall taxable sales are closely aligned with January’s experience.

The city of Aspen’s allocated portion of Pitkin County’s 2.0% sales tax started the calendar year up roughly 24%, somewhat higher than the city’s own sales tax collection growth for January 2023 of 19%.

Variances in these percentages can often be attributable to the mix of industries within the narrower city economy vs. that of the larger county economy (which also has more online retailer influence), Strecker said. These funds remain one of the only sources of discretionary receipts for the City Council to apply and are deposited within the city’s General Fund.

Real estate taxes lag

After three months, aggregate volume in real estate activity is lagging last year’s experience by 21%.

With this drop in transactions, it is not surprising that overall tax receipts are pacing roughly 41%- 42% below last year’s collections. However, that said, this also alludes to the value in cost per square foot retreating from recent highs, further highlighting the changing real estate market, according to the report.