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Sales tax collections up in June after declines

Strong sales in July and August could put the city back on track
Sales tax collections were up in June following two months of declines. But city government still plans to be conservative with its spending for the rest of the fiscal year.

City sales tax collections rebounded in June, after two months of declines.

General city sales tax collections for June were up 5.6 percent from June 2015 – from $1.46 million to $1.5 million. Lodgers tax collections likewise were up about 9 percent, from $120,518 to $131,520, according to city reports.

Even though the collections are back up, City Manager Ron LeBlanc told the Durango City Council last week that city departments will cut spending for the rest of the year.

The city budget had assumed that sales tax collections would be up about 4 percent compared with last year, and the collections are up only about 3 percent.

“The most challenging type of economy is one that is erratic,” he said.

The city investigated sales tax collections in June and determined that the earlier decline was not caused by companies filing late, Finance Director Julie Brown said.

“Our largest filers that could affect a swing of greater than 1 percent were filed on time,” she said.

The city plans to be conservative so it can finish the year with a balanced budget, LeBlanc said.

The decline in spending that the city saw in April and May could be from internet shopping taking away from Durango retail sales.

It is also possible the decline in Farmington’s economy and population is translating into less disposable income throughout the region, LeBlanc said.

During the second quarter of the year, the gift shops and galleries in the central business district saw a decline 4.7 percent in sales tax collections, said Tim Walsworth, the executive director of the Business Improvement District.

In May and June, the restaurant sector in the downtown area also saw some decline.

“It’s something BID is going to keep our eye on,” he said.

It is strange that sales taxes are not correlating to lodgers taxes directly, he said.

However, strong sales in July and August may return Durango to the levels of economic growth it has seen in recent years.

“We’d love to end the year closer to 5 percent growth,” he said.

mshinn@durangoherald.com

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