Retail and Construction Tax Collections Above Previous Year



MONTROSE – After several years of declining tax revenues and revising budgets, the City of Montrose is seeing a year-over-year increase in one of its largest revenue contributors — its sales and use taxes.

"I think we are in an OK position," City Finance Director Shani Wittenberg said. "At least we are holding and growing a bit. Hopefully, we'll continue to move in that direction."

The city's mid-year report shows that the city has collected 7.7 percent above its 2012 budgeted sales and use taxes — a first since 2010's mid-year report. And the city is reporting that all tax collections, except for the hotel excise tax, have increased over 2011's mid-year collections.

This will be the first in several years that the city won't have to readjust its budget by decreasing expenditures to account for less-than-expected revenues, Wittenberg said.

"It was October 2008 that we saw the first decline in revenues (from sales and use tax) over the previous year," she said.

Sales and use tax revenues account for about 70 percent of the city's annual general budget.

When the economy took a turn for the worse several years ago, the city revenues suffered along with it. In 2009, retail sales tax collections came in 9 percent below 2008 collections and construction tax collections were down 57 percent. The result was the city facing an 18 percent decrease in projected revenues.

"We had to reduce expenditures to account for that less revenue," Wittenberg said.

But even with revisions, the 2009 sales and use tax end-of-year collection was almost 9 percent short of the revised budget.

And 2010 wasn't any better, as the city squeaked by at only 1.1 percent above its budgeted revenues for that fund, with retail sales and construction collections down over the previous year, she said.

The decline in revenues continued in 2011. Retail sales tax collection again dropped below the previous year's collections, as did construction use tax, which fell 33 percent over the previous year.

But added construction activity, such as Taco John's that recently was built at the corner of Main Street and San Juan Avenue, and Russell Stover's new building, has improved this year's construction tax collections by 25 percent over last year's, as of June. And retail sales tax was up more than 2 percent as of June.

Although the numbers are fairing well as of mid-year, Wittenberg said the city will continue to review its collections, and make adjustments when necessary.



Kati O'Hare at kohare@watchnewspapers.com or Tweet @katiohare