Retail revenues stay hot for city
The reports are in, and the bottom line is consumers still can’t get enough of Aspen.Sales and lodging tax revenues continued to grow at a record pace in April, and according to city finance director Paul Menter, there’s no reason to expect that to change this year.The Consumption Tax report, which the finance department released Friday, includes sales and lodging tax revenues as well as real estate transfer tax revenues.Through April, Aspen’s year-to-date retail sales total $190,073,463, up 11.2 percent from the same period last year. Retail sales for April total $21,520,799, an increase of 17.9 percent over April of 2005. Year-to-date lodging tax revenues through the end of April total $465,452, up 13.9 percent, and April lodging revenues total $22,539, up 8.8 percent. Year-to-date housing RETT revenues through the end of May total $3,391,098, up 17 percent over the same period last year.Menter credits the increase in April’s sales and lodging revenues to the ski resort’s staying open a week longer than last year.”It helps the retailers,” Menter said of the extra ski week. “It definitely indicates that it provides them a bit of a bump in the shoulder season.”Restaurant and retail sales in particular saw a big boost, with fur stores continuing to see some of the heftiest increases. Compared to April 2005, fur stores saw a jump of almost 70 percent. The “sports equipment/clothing” and “clothing store” categories saw increases in the mid- to high 30 percent range, and “restaurants/bars” jumped nearly 31 percent.Adjusted for inflation, however, the numbers aren’t quite so hot.”Over a 10-year period, we’ve seen sales tax grow on average at a rate that keeps up with inflation,” Menter said.Consumption-based tax revenues have increased an average of 3.3 percent per year since 1995, but over the past 24 months, those revenues have generally increased at double-digit rates. Menter called the strong upward trend exceptional, but he said it can’t last forever. “I would submit that it’s already lasted longer than it has at any other time in the last 10 years,” he said. “We will at some time see a return to more modest sales tax growth. We have, on occasion, seen contraction.”Why the surge over the past two years?It’s “a combination of things – just getting the economy back to where it was prior to 9/11,” Menter said – that and recovering from the recession that preceded the Sept. 11, 2001, terrorist attacks. “People forget that the country was sliding into recession” before the attacks.The city uses the consumption tax revenue reports to help shape the annual budget. Although Menter cautioned that the huge increases cannot continue unabated, he has faith in the city’s powers that be not to exhibit what former Federal Reserve Chairman Alan Greenspan has called “irrational exuberance” about the rising numbers.”I think the decision-makers and the leaders of this community understand that completely,” he said. “It’s reflected in the budgeting decisions that they make.”Menter said it’s anyone’s guess when the good times might end, but historically speaking, in Aspen, the first three months of the year are key.”We’re able to predict our year-end projections with great statistical accuracy” based on the first three months’ revenues, he said. “That’s something we’ve taken advantage of. We have the ability to make changes and adjustments on the fly and still live within our means.”The first three months of 2006 all saw large revenue increases.Sales, lodging and RETT revenues combined make up about 25 percent of the city’s total income. Despite being only one quarter of the big picture, the numbers are still a good “benchmark for the local economy,” Menter said. “The sales tax percentage is a direct mathematical reflection of how much money is being spent in Aspen for retail sales and lodging.”The revenues aren’t necessarily a predictor of the city’s overall financial health because they don’t take into account the city’s expenses or other, non-consumption-related incomes such as rental fees for housing or fees for services at the recreation department. Menter noted that the city is in good shape financially, too, but he stressed that the monthly consumption tax report is a better tool for evaluating the strength of the local economy than it is a gauge of the city’s financial health.Menter said the primary predictors for the local economy are housing retail sales, state and national travel habits, and the construction industry.”We are currently seeing unprecedented [construction] activity,” Menter said.That might be good news for the economy, but it’s bad news for Aspen preservationists. The pace of construction in Aspen is so frenzied that city council issued a moratorium on building permit applications April 25.”There’s still substantial life left in that pipeline,” Menter said. “That’s how it appears to us.”Abigail Eagye’s e-mail address is firstname.lastname@example.org
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