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March sales tax plummets

Collections decline 22.5 percent from same month in 2008

Brandon Gee

By the numbers

Sales tax collections have been decreasing for the past seven consecutive months in the city of Steamboat Springs.

Month: Sales tax decrease

March 2009: 22.5 percent

February 2009: 19.6 percent

January 2009: 13.5 percent

December 2008: 9.1 percent

November 2008: 8.8 percent

October 2008: 4.3 percent

September 2008: 3.8 percent

Source: City of Steamboat Springs

— Steamboat Springs’ March sales tax report, expected to be released today, will show a 22.5 percent drop in collections for the month, city officials said Tuesday.

Year to date, city sales tax collections declined 18.5 percent in the first quarter compared with the first quarter of 2008. March was the city’s seventh straight month of year-over-year sales tax decreases, and the gap is widening – the percentage decrease has increased each month.

If sales tax declines continue to accelerate, the city will be forced to consider additional budget cuts that could include layoffs, officials said. The city already has cut millions of dollars from its 2009 budget through moves including weekly furloughs for most city employees. Those cuts allowed for as much as a 19 percent decrease in sales tax this year.

“We are down at what we had projected on our revised budget,” City Manager Jon Roberts said Tuesday. “We’ll be looking now at the next month to see if the reductions flatten out. If the reductions continue to accelerate, we will have to look at additional cuts.”

The March sales tax figures were disclosed during City Council President Pro-tem Cari Hermacinski’s and President Loui Antonucci’s weekly City Council agenda review meeting Tuesday, with city officials including Roberts and interim Finance Director Bob Litzau.

“The trend isn’t looking good,” Hermacinski said after the meeting.

Antonucci agreed that “it looks like the slowdown is accelerating,” and noted that this most recent monthly drop is particularly painful because March is the city’s biggest for sales tax collections. However, Antonucci also said collections for April and May might stabilize because they are less dependent on tourism spending.

“I think the local spending is probably more consistent,” Antonucci said.

But February returns suggested locals are buying less, as well. That month, the base of Steamboat Ski Area and western Steamboat each saw sales tax decreases of 28.7 percent. Western Steamboat caters primarily to locals. A detailed March sales tax report – which will divide sales tax revenue into categories and areas – is expected to be released today.

March’s sales tax decrease was the largest of the current economic downturn. Sales tax decreased 19.6 percent in February, 13.5 percent in January, 9.1 percent in December, 8.8 percent in November, 4.3 percent in October and 3.8 percent in September.

Roberts said the city already has reduced its expenditures to the minimum level necessary to sustain services and said additional cuts would require a reduction in service levels or the use of financial reserves. Asked whether a reduction in service levels would include layoffs, Roberts said, “I think at this point, we wouldn’t rule out any options.”

City Council is scheduled to receive an update on the 2009 budget at its meeting next week.


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