Slumping Aspen sales tax figures reflect economic downturn
August 9, 2009
ASPEN – June sales tax figures for the city of Aspen show the resort is still feeling the effects of the recession, further exacerbating budget woes with in City Hall and nervousness among local business owners.
Sales tax collections for June were down 14 percent from the same month in 2008, according to City Finance Director Don Taylor.
The categories that are dependent on tourist-oriented sales did not fare well, which include sports equipment and clothing, clothing stores, specialty retail and tourist accommodations. Those four industries represent 50 percent of total annual taxable retail sales.
Lodging tax collections for June were down 8 percent from last year, and year-to-date figures are down 26 percent.
Aspen’s portion of Pitkin County sales tax receipts for May were down 10 percent from 2008, which is the same decline as the city’s collections for that same month, according to Taylor.
Sales tax provides funding for the city’s general fund, parks and open space, affordable housing, day care and transportation.
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City officials had first projected that there would be zero percent change from 2008 with this year’s sales tax figures. That was revised to 12.5 percent in February and now Taylor projects a 14 percent decline.
The 2010 forecast for sales tax collections is a 4 percent recovery, which is based off a very low 2009, according to Taylor.
Like retail sales, the Aspen real estate market continues to feel the effects of a weak national economy. Year-to-date Wheeler real estate transfer tax collections through July 2009 were 6 percent behind for the same period in 2008. The year-to-date housing real estate transfer tax collections through July were 8 percent behind for the same period in 2008.
Taylor told the council last month that 2009 will go on record as one of the most difficult in modern times. About 12 positions within City Hall were eliminated. He estimated that sales tax is expected to decline about 13 percent for the year and is down about 19 percent year to date.
Taylor characterized building construction as falling off a cliff this year and real estate transfer taxes are estimated to drop 18 percent after declining 41 percent from 2007 to 2008.
Community development fees are expected to be down about 7 percent for 2010 and 2009 will be down about 50 percent from the prior year. City financiers had assumed a substantial rebound in 2010 but now there is lit tle indication that there will be any significant increase in building activity, according to Taylor.
In preparing the 2010 budget, department heads within City Hall have been asked to submit budgets that would be no more than 1.5 percent more than this year. Inflation is expected to run between 1 and 2 per cent next year so real growth in City Hall departments will be zero, Taylor added.
The City Council will have to make some difficult choices in balancing the 2010 budget based on lower sales tax revenues, which could translate in less funding for nonprofits and social services. The council has made one of its goals for the upcoming year to allocate financial resources that reflect community values rather than across the board reductions in city services.