Although the summer vacation season is drawing to a close, sales taxes for the first month of peak tourism have just been reported. Based on taxes remitted to the City through June, our local businesses saw a decrease of 3.8% in taxable sales compared to a year ago. For the month of June, taxable sales declined 1.87%.
As our Mayor pointed out upon receiving this latest update, it seems a bit strange that we are pleased about a decrease in taxable sales. However, this modest decline is in fact good news when we compare our local economic trends to those across the state. Many communities are continuing to experience double digit shortfalls compared to a year ago.
The economic downturn has certainly been more difficult for some businesses, and we do not want to minimize the challenges of sustaining operations through these times. We appreciate our local business men and women who continue to provide quality goods and services that draw residents from other communities and keep locals shopping at home.
Business areas within the City are continuing to become more attractive to shoppers. It is exciting to see downtown property owners investing in improvements to buildings in the historic district. Also, the City is about to start the nearly one million dollar streetscape improvement project on Highway 50 from Holman Ave to D Street, with approximately 90% of the funding provided through grants.
Members of the community also deserve recognition for our relatively positive sales tax figures. Community support for local business is fundamental for Salida’s economic viability. Agricultural, retail and service businesses are necessary for this community to retain the character and resilience that has existed for so many years. Although this article started with a discussion about the tourist season, patronage from residents of our regional shopping area sustains many businesses.
I believe most of our citizens (and visitors) appreciate that Salida is a “real town” as opposed to a resort community, which is largely because of our local businesses. Tourism certainly brings additional revenue to the community. However, heavy reliance on the tourism industry makes Salida more susceptible to outside economic conditions for its viability. Many Colorado tourist communities are experiencing that reality this year.
Our community has the capacity for an even greater level of self sufficiency in providing food, basic necessities and other goods and services. Hopefully local businesses will continue to provide a large portion of the total purchases of our residents. Most everyone will agree Salida needs more decent-paying jobs for local residents. Buying local sustains those jobs.
Not only do individual business owners depend upon local customers; the basic services of the municipal government are largely provided through sales tax dollars. Normally, at least two-thirds of the City’s general fund annual budget comes from the collection of sales tax. Imagine the difference in Salida if we could not afford the current level of services to maintain and improve our streets, parks and trails or to have sufficient police and fire protection for citizens.
Many people are opposed to the idea of bigger government so perhaps our tight budget is appreciated by some! That aside, we regularly hear requests from residents who would like the City to provide more services and amenities or make more improvements in public infrastructure.
In response to the sales tax decline, the City made budget cuts early this year when the growth trend first started to reverse. The majority of these cuts were postponements of capital purchases and reductions in funding for community support requests. The 2009 budget anticipated sales to be flat year over year. The current shortfall is within the adjusted revenue expectations for sales taxes.
We are currently working on the next year’s annual budget, which is always a challenging process. Council needs to make several difficult decisions about maintaining what we have and investing in the future. A reliable sales tax revenue stream is important for developing and implementing any City project or maintaining current service levels.
One initiative that is being developed for 2010 is a business license process. This would enable the City to have a complete directory of all businesses operating within the City to use for increased communications. This information would also help the City know that all business owners are on the same playing field with respect reporting taxes collected from customers. Business license fees would be set in a range to cover administrative costs.
City officials and members of the chamber of commerce have begun meeting to discuss other ways that we can work together more cooperatively.
As a final note – in case it seems like a long delay in seeing this economic indicator, this brief explanation is also provided. As a statutory city, Salida relies on the Colorado Department of Revenue for vendor collections and remittance of the sales tax receipts. Salida businesses send the sales tax they collect from customers to the state at the close of each month or quarter depending on revenue levels. The City receives these funds about a month later. Should Salida’s residents choose to convert to a home rule charter, we would have the option of collecting sales tax directly from businesses. We would receive taxes collected locally more quickly and be aware of local trends sooner.
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