by Marissa Lorenz
Due to COVID19-related closures, governments have been anticipating large losses to sales tax revenue, an important income source for counties and critical for municipalities, generally providing over 75 percent of town incomes. However, the most recent sales tax receipts, returned to the County and Town of Kremmling last week, indicate that those fears have not yet been realized locally.
County sales tax numbers better than expected
At the most recent Board of County Commissioners’ meeting, County Finance Director Curtis Lange presented April sales tax numbers as only having been 4 percent lower than what had been budgeted, a number equal to last year’s April sales tax revenues. Since March, Lange has been attempting to make budget modifications, anticipating a 50 percent drop in sales tax revenues. The April numbers are an important first indicator, as Colorado COVID-19 restrictions were first implemented in March, with the most restrictive mandates going into effect on March 26.
While State sales tax reports are limited in what information goes back to local governments, in order to protect the privacy of businesses, Commissioners were interested in any possible breakdown of information that could indicate what businesses were more or less impacted by the closures. “It would be great if we could dig in,” said Commissioner Rich Cimino, “so we could understand our economy better and be better prepared.”
Brief discussion had Commissioners, the Finance Director, and the County Manager reflecting on possible explanations for the continued revenue. Commissioner Merrit Linke noted, “this is just speculation on my part, but I think people were staying at home and doing a lot of internet shopping.” The collection of sales tax on internet purchases just went into effect in late 2019 in Colorado, so there is little data yet to know what impact that may have in general, let alone during homebound orders.
Brad White, Grand County’s COVID-19 Incident Commander, also observed that “sales tax for grocery stores, hardware stores–those essential businesses that were open the whole time–their sales were way up.” Interestingly, he also mentioned that “water plant operators and sewer plant operators have said that the demand for water and sewer, even during the Stay-at-Home order, has been huge. It’s their feeling that we’ve got a fair number of people who came to hide out up here all along. So they’re probably spending a little bit locally.”
Lange indicated that he would feel comfortable re-adjusting the projected sales tax impact of COVID-19 to 75 percent of what had been budgeted, rather than the 50 percent he’d been projecting. Commissioners preferred waiting until May numbers are returned before making any changes to the projected revenue numbers.
Town sales tax revenue still on upward trend
Kremmling numbers are even more encouraging. The Town collected $79,143.52 in sales tax in April, about $15,000 more than the 2019 April collection of $64,123.42 and representing a 23 percent year-on-year increase.
In all, the Town is averaging a 20 percent increase in sales tax revenue over last year, having collected a total of $330,898.93 from January through April, as compared to $276,318.25 for the same time period in 2019.
Kremmling collected $93,622.28 in January, compared to $78,612.69 in 2019, a 19 percent increase; $75,834.46 in February, a 17 percent increase over 2019’s $64,770.04; and $82,298.67 in March, compared to $68,812.10 in 2019, a 20 percent increase.
Town Clerk Joanna Eaton notes that “[Town Manager] Dan Stoltman and I are truly amazed at how well our sales tax numbers have been this year.” She continues to work on the breakdown of lodging and restaurant numbers and will have those prepared soon.