Retail sales are up for the first half of this year, but not as much as city officials anticipated.
Some business leaders say summer sales may make up for the slow start, but those numbers are not yet available.
City records show a 1.7 percent increase in general city sales tax collections from December through May compared with the same period last year. But the city budgeted for a 3.7 percent increase in sales tax collections in 2017 compared with 2016.
City Manager Ron LeBlanc said he asked department heads to be as fiscally conservative as possible given the slow growth. The city has not trimmed back on hiring or delayed construction projects as a result of the lower-than-expected sales tax collections, he said.
Overall, sales tax collections are likely to be up in 2017, but the growth is likely to be lower than what the city enjoyed from 2012 through 2015, said Tim Walsworth, executive director of the Durango Business Improvement District.
“We are not going to have the 5 to 6 percent growth that we enjoyed coming out of the recession,” Walsworth said.
General sales tax collections through May were volatile, and in January and March, collections declined compared with the same months last year. February, April and May saw sales tax collections increase between 2.3 percent and 3.3 percent, city records show.
Lodgers tax collections are up 8.8 percent through May compared with last year. In January, lodgers tax collections fell 15 percent, but in every month since then, they’ve been up.
Despite the rocky start, some of the peak tourist season months have yet to be reported, Walsworth said.
“A business that has been around here for a long time knows the cyclical nature of the economy,” Walsworth said.
Along Main Avenue and adjacent streets, restaurant and retail vacancies are down to 2.7 percent compared with 3 percent last summer, he said.
Two large vacancies that Walsworth would like to see filled are the former home of Urban Market on Fifth Street and the space formerly occupied by Cocktails and Creations on the northeast corner of College Drive and Main Avenue.
While internet shopping is a threat to retailers, Durango may be insulated from e-commerce thanks to roughly 1 million tourists who visit each year and account for about half of the sales in La Plata County, Walsworth said.
Karyn Gabaldon, who owns a gallery in Durango, has had a slower summer compared with last year and prior years.
She is not sure if bad publicity over panhandlers, the slowdown in oil and gas prices or other factors might be responsible.
“We don’t know what it is that’s causing this,” she said.
Jonathan Schwarz, owner of Durango Bagel, said he’s had a good year. But he noticed June in-town sales were a little slower than last year, possibly because of the Lightner Creek Fire and lower oil prices in Texas.
“I do believe the wildfire and all the national coverage probably affected people coming to the area,” he said.
City sales taxes are not the only measuring stick for the economy; there are some positive signs, such as low unemployment, higher wages, higher natural gas prices and healthy construction and manufacturing sectors.
Economic indicators in May were positive for the first time this year, according to data compiled by the La Plata County Economic Development Alliance. Before May, the economy was in neutral or negative territory.
Alliance Executive Director Roger Zalneraitis is optimistic about the tourist season.
“Our tourism this summer looks like it’s booming,” he wrote in an email.
mshinn@durangoherald.com
