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Healthy sales, lodgers tax point to post-COVID recovery

June sales taxes up 34% from same month in 2020
Strong sales and lodgers tax collections in June point to a healthy rebound from the economic slump caused in 2020 by the COVID-19 pandemic. (Durango Herald file)

Healthy receipts for sales and lodgers taxes for June are encouraging – showing a robust economic rebound in Durango from 2020, a year marred by the COVID-19 pandemic.

For the month of June, sales tax collections came in at $2.85 million

Year-to-date, for the first six months of the year, sales tax collections came in at $15.51 million compared with $12.57 million for the first six months of 2020, more than a 23% increase.

Should sales tax collections remain strong, Mayor Kim Baxter sees the possibility of contributing some city money to jump-start development of workforce housing in Durango, where the median price for a single-family home hit $583,687 in the first quarter of the year.

“If we can continue to trend strongly throughout the end of the year, I’m really hoping that’ll allow us to put even more money into a workforce housing program,” Baxter said.

The money would be a one-time source of funding, and Baxter said the idea was to use the funding wisely to get the most bang for the buck with the sales-tax revenue coming in.

More important than sales-tax comparisons to 2020, Baxter said, is a comparison of sales-tax collections to budget predictions for this year.

And Baxter said sales-tax receipts still look good when compared with the anticipated revenue the city had in its 2021 budget.

A year-to-date June 2021 summary of sales and use tax issued by the city shows total sales and use taxes for the first six months of the year are at $16.7 million.

That $16.7 million in actual collections compares with the $13.6 million the city had anticipated collecting in total sales and use taxes through June 2021. Those numbers mean the city is $3.1 million ahead of its projections, almost 23%.

Not only are tax revenues looking good, Durango Chamber of Commerce Executive Director Jack Llewellyn said the eye test appears to support a robust economic rebound.

“I was downtown last night, and I was amazed,” he said. “This was about 7:30. I was walking around with a lot of people out on the streets. All the bump-outs were full. There were lines outside restaurants.”

Tourists fill the sidewalks earlier this month on Main Avenue in downtown Durango. (Jerry McBride/Durango Herald file)

Sales-tax numbers might look even better if restaurants and hotels could hire to fill all of their positions.

Llewellyn noted the sales-tax increases are coming with many restaurants still operating with limited hours, even closing some days, because they can’t fill shifts.

The return of students to Fort Lewis College and the Sept. 6 end to enhanced unemployment benefits, which provide $300 more a week than the normal unemployment rate, would all help fill empty positions that are now limiting hours for many downtown businesses.

Llewellyn also pointed to strong lodgers-tax receipts as further evidence that the economic woes created by COVID-19 are in the past.

Lodgers taxes collected in June 2021 amounted to $109,665. It’s no surprise that June 2021 lodgers-tax numbers outpaced June 2020’s collection of $27,192, which came in the midst of the COVID-19 pandemic.

But the number also outstripped collections in June 2019, one of the best months for lodgers tax collections in years. June 2019 lodgers tax collections came in at $100,133.

“Everything is trending in the direction we want, and our lodgers tax numbers aren’t an exception. It’s an encouraging sign when you look at all the numbers,” Llewellyn said.

He added pent-up demand for travel, especially to rural areas with plenty of outdoor opportunities, likely means lodgers tax numbers will remain healthy for some time.

“I think there’s pent-up demand to travel,” he said.

Baxter said the city’s ability to collect sales tax on internet sales did help minimize lost tax collections in 2020 because many people were avoiding stores and shopping online.

The healthy sales-tax situation, Baxter said, if it continues, would help the city focus resources on the shortage of workforce housing.

Ideas about how that excess revenue might be spent include purchasing land, helping to pay for infrastructure such as utilities, roads, sidewalks, curbs and gutters – all to attract developers to build attainable housing, she said.

The city is looking to extend a waterline down La Posta Road (County Road 213), and that will help development of workforce housing and light industrial development in the area, Baxter said.

Healthy sales-tax receipts make it more likely the city can fund things like the La Posta waterline extension, she said.

La Plata County is studying extending a sewer line down La Posta Road. If the city also extends a water line, it should spur development of attainable housing, Baxter said.

The fat sales-tax numbers coming in might also be able to be used in combination with the Durango Renewal Partnership to further stimulate development of attainable housing.

The Durango Renewal Partnership is a development tool that creates special districts, districts where any new sales taxes and increased property taxes coming from higher property values caused by new development and redevelopment can be targeted for specific purposes – like building workforce housing.

Also, City Council has approved a mid-year budget adjustment to create a housing division in the Community Development Department, and the strong sales-tax numbers will help ensure there is revenue to support the new position, Baxter said.

“It will start out as consulting help with that, but eventually, it will become an employee so that we get a housing division set up,” she said.

She added: “We’ll have a department in the city that can focus on (attainable housing) – they will wake up in the morning thinking about housing, and they will go to sleep at night thinking about housing,” she said.

parmijo@durangoherald.com

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