Data Sense: Craig sales tax collections poised for continued growth throughout 2013
May 14, 2013
By the numbers
City of Craig sales tax data
■ 2013 first-quarter retail sales: $36,206,587
■ Sales tax rate: 2.25 percent
■ 2013 first-quarter sales tax collections: $814,648
■ Change compared with 2012 first-quarter sales tax collections: 9.9 percent
■ Portion of annual sales tax collections typically collected in first quarter: about 22 percent
■ Forecast total 2013 sales tax collections: $3,756,162
■ Actual 2012 sales tax collections: $3,514,431
■ Change from 2013 forecast compared with 2012 actual: 6.9 percent
■ 2013 sales tax collections forecast in budget: $3,437,000
■ Forecast 2013 sales tax difference from budget: $318,462
Source: City of Craig, Yampa Valley Data Partners
It's amazing how much information we can extract from small bits of data. Take the sales tax collection data recently released by the city of Craig. Although we have only three months of sales tax data for 2013, the data for the first quarter actually give us a pretty good idea of how collections are likely to shape up for the rest of the year because of the predictable monthly pattern in sales tax collections. The data tell us that total 2013 sales tax collections are likely to be well above 2012.
Because the Craig budget planned for sales tax decreases in 2013, if 2013 tax collections exceed 2012 collections, the general fund will have more sales tax revenue by year-end than expected. This also means that retail sales in Craig will be higher than expected this year. It will be interesting to see when sales tax levels return to the towering heights experienced during the 2008 peak, when sales tax revenues reached $3.7 million.
According to the city of Craig, sales tax collections in March 2013 were about $297,000. This value represents an increase of $53,000 relative to collections in March 2012. This brings year-to-date sales tax collections to $814,648 and represents a 9.9 percent year-over-year increase. Will this growth rate hold up for the remainder of the year?
Because we know the historical pattern of monthly sales tax collections in Craig, we can make a pretty good guess. It turns that out since 2001, first-quarter sales tax collections in Craig have accounted for an average of about 22 percent of total annual collections. Using this information, we can simply divide 2013 first-quarter sales tax collections by 22 percent in order to produce a reasonable forecast of the 2013 total. When we do this, we arrive at a 2013 annual sales tax collections forecast of $3.76 million. This figure represents a 6.9 percent increase from 2012 sale tax collections and indicates that year-end sales tax collections are likely to be about $318,000 greater than expected in the 2013 budget.
Of course, we know this prediction will not be entirely accurate because no one knows exactly what the rest of 2013 has in store. However, it does represent a best estimate given the information that is available to us today. And when it comes to 2013 sales tax collections and retail sales, the best available information paints a positive picture for the remainder of the year.
Brandon Owens is an independent contractor for Yampa Valley Data Partners.