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La Plata County may have weathered worst of COVID-19 financial hit

Sales tax revenues expected to exceed projections
La Plata County and the city of Durango had a “robust summer,” local economic experts say.

Despite the COVID-19 lockdown earlier this year that brought economic hardship across the community, it appears La Plata County is on track to not only hit, but exceed sales tax projections – a sign of a strong recovery.

Last year, La Plata County projected sales tax revenues – a tax paid to the county for the sales of certain goods and services – would hit an estimated $17.6 million in 2020.

But the economy, across the country, came to a screeching halt in March as restrictions were put in place to slow the spread of COVID-19, such as shutting down nonessential businesses and forcing restaurants to offer only takeout.

But as those regulations were relaxed in late spring and early summer, it became clear it was going to be a busy year for tourism in Southwest Colorado, with many people eyeing the region’s outdoors as a safe haven from the virus.

“We definitely saw the impact of folks coming to Durango and vacationing,” said Durango Chamber of Commerce Executive Director Jack Llewellyn.

Indeed, La Plata County’s sales tax revenues reflect that narrative, said county spokeswoman Megan Graham. From January to July, sales tax revenues are up about 14% compared with last year.

The county did receive a one-time large collection of about $842,000 in March, but even if that’s removed from the equation, sales tax revenues are still up nearly 8% compared with the same time period in 2019.

(Graham said state regulations prohibit her from naming specifically what led to the one-time collection, other than to say the “mining and extraction sector.” Llewellyn speculated it was the sale of BP America Production Co.’s oil and gas assets to IKAV, which occurred in March.)

Regardless, so far this year, sales tax from retail is up nearly 40%, to about $528,000, compared with 2019. Graham said that number includes new revenues from internet sales, which the state now taxes and disperses to communities.

Tim Robertson, a partner at Brown’s Shoe Fit, said his business was closed 60 days before being able to reopen. But once it did, the store had a “surprising” rebound, mostly from out-of-towners here to enjoy the outdoors.

“We opened as soon as we could,” Robertson said, “(and) our business rebounded nicely.”

Sales tax from marijuana purchases was up nearly 60% in July and is up about 45% for the year compared with 2019 numbers, Graham said.

Sayrah Sims, the marketing director for Prohibition Herb, said those numbers don’t surprise her.

“We saw a huge surge,” Sims said. “This has been our biggest summer ever, and our summers are usually pretty big.”

Sims said Prohibition’s clientele is usually a 50-50 split between locals and tourists. The uptick in sales was likely a combination of more tourists in town, and locals buying more marijuana, in part driven by COVID-19 restrictions.

“If you have more free time to enjoy the things you like doing, like smoking weed, you’re going to consume more of it,” she said.

Sales tax on building materials and gardening supplies was up as well to about $91,000, a nearly 20% increase year to date, likely a result of more people staying at home and working on projects around the house, Graham said.

All things were not rosy, however, Graham said. As expected, the industries that took the hardest hits were restaurants and bars, as well as hotels.

In May, for instance, sale tax revenues from restaurants and bars were down nearly 60% compared with May 2019. From January to July, those numbers still show a 20% decrease from last year.

But there are encouraging signs, Graham said. July sales tax for restaurants and bars weren’t down as much as at the height of the lockdown (only about 11%), and hotel sales taxes were about the same as last year.

And county officials are projecting sales tax revenues, which are currently at $14.6 million, will actually exceed the $17.6 million originally projected.

“So far, certainly, the impacts a lot of folks in local governments were bracing for have not been felt in La Plata County,” Graham said. “If that trend continues, we’ll come out OK.”

Llewellyn said both La Plata County and the city of Durango had a “robust summer,” but he said there is some concern as the region moves into fall and winter, when tourism is not as high as in summer.

“I don’t feel like we’re out of the woods yet, but if we can all continue to do our due diligence, I think it’s going to be helpful,” he said.

One way to boost the local economy is for residents to shop at local businesses, Llewellyn said, and a number of groups like the Chamber and Local First have partnered to push that message.

jromeo@durangoherald.com

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