Retail sales remain on a roll
ASPEN It appears that the city of Aspen has posted yet another stellar month in sales-tax collections – the bread and butter of the government’s general fund revenue. Revenue from retail and lodging sales, as well as construction activity, have all seen significant increases for June and so far this year. March is the only month that hasn’t experienced growth in retail and lodging sales, mostly because of the lack of snowfall and as a result, fewer people in town.”With the exception of March, the sales and lodging tax collections for the first six months of 2007 appear to have posted very healthy gains,” City Hall Finance Director Paul Menter wrote in his monthly sales tax report. “Overall, we have an approximate 6 percent year-to-date increase in both taxable retail sales and sales taxes through the end of June …”Sales tax collections for June are up 12.6 percent from the same month in 2006, according to Menter. Year-to-date sales tax collections through June are up 5.9 percent from 2006. June retail sales are about $39.5 million, representing a 15.3 percent increase compared to 2006. Year to date, retail sales are roughly $254.1 million, which is a 5.9 percent increase.Lodging tax collections for June are up 24.4 percent over last year, and 10.6 percent year to date over 2006. Tourist accommodations are reflecting a healthy gain – 11 percent year to date. That’s significant for the city, since tourist accommodations represent 32 percent of the year’s collections.Construction has a huge impact on the city’s budget – there has been a 35 percent increase year to date in the general retail and construction category, which appears to be caused by the continuing construction and remodeling going on in Aspen, Menter said.As a result of Aspen’s continued strong and sustained growth in the real estate and retail economies, the city has a glowing financial picture. But it appears that the city’s reliance on the real estate transfer tax, which is collected on every home sale in Aspen, is somewhat in jeopardy.Collections on the real estate tax that funds the Wheeler Opera House are 18 percent behind last year. However, they are 36 percent ahead of what’s budgeted. Collections through July are just over $3 million.Collections on the real estate tax that funds the affordable housing program are 12 percent behind, but 31 percent ahead of the 2007 budget. Collections through July reflect nearly $5.6 million.Wide fluctuations in real estate transfer taxes are normal, Menter said.”We budget that revenue very conservatively,” he said. “We know that [the real estate market is] going to come down and 2007 might be the year.”Menter noted that the city in the past two years has experienced phenomenal growth in fractional ownership unit sales and mid-priced homes, which Menter classifies as below $3 or $ million.”Those seem to have slowed down significantly,” he said. “It’s a more volatile market.”What also didn’t do well in June is clothing stores, and restaurant and bars, which experienced 1.3 percent and 1 percent increases, respectively, so far this year.Restaurants are a diminishing revenue source for the city. They used to represent 20 percent of the year’s collections but now only represents 17 percent. That’s partly because there are fewer of them, Menter said.”We’re living off the current population of restaurants and they are at capacity,” he said, adding restaurant owners he has talked to said they are having a great summer. Utilities and telecommunications posted a decline of 6.1 percent from last year. Menter said the decrease is most likely because of a reduction in the cost of energy to utility companies, and not necessarily because customers are consuming less.Menter predicts that based on trends thus far, City Hall will collect $11.2 million in sales tax revenue by the end of the year, representing a 5.8 percent increase over 2006. As far as lodging tax collections go, Menter estimates nearly $2 million by year end – a 10.3 percent increase.
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