Sales-tax revenue improves

After bottoming out last year, Grand Valley local governments’ sales-tax revenue has started to inch up, a sliver of light during an otherwise dark time that has perpetuated layoffs and service reductions.

But even the most optimistic budget managers and economy watchers caution that a few months’ worth of improving retail sales isn’t indicative of a trend. And they say sustained improvement remains a ways off.

“It’s encouraging news, but I wouldn’t be betting the bank on what’s going on yet,” said Diane Schwenke, president and chief executive officer of the Grand Junction Area Chamber of Commerce.

After 21 consecutive months of registering less sales-tax revenue than the previous year, Mesa County tallied a 6.7 percent increase in sales in August ($1.52 million compared to $1.42 million in August 2009) and a 3.2 percent increase in September ($1.48 million compared to $1.44 million). Year-to-date, the county remains down 9 percent compared to the same time last year.

“We’re hoping that this is a trend and we’ll have some positive months to conclude 2010,” Mesa County Finance Director Marcia Arnhold said.

The city of Grand Junction just completed its fifth straight month of growth in sales-tax receipts, although its total revenue through the first eight months of the year remains down 7 percent from the same time last year.

City Financial Operations Manager Jodi Romero noted the city will begin construction on a new public safety center and improvements to Suplizio Field next year, which should stimulate some spending.

But she said new commercial development is a better indicator of the city’s revenue fortunes. And there is nothing in the city’s pipeline.

“It’s that lack of activity that makes me cautious and concerned about saying we’ve started an upward trend,” Romero said.

Fruita and Palisade have managed to buffer themselves against the down economy, tallying more revenue from their individual sales-tax rates so far this year than last year. Fruita is up 2 percent over the same time last year, while Palisade is up 10 percent.

Schwenke said one factor that could explain the bump in revenue is simply the fact people are tired of not spending.

Retailers are hoping that attitude will carry over into the critical holiday season, but shoppers’ temporary desire to spend after a prolonged down time isn’t enough by itself to turn around the economy.

More telling, Schwenke said, are the responses she received to the chamber’s biannual economic survey.

With more than one-third of the chamber’s members participating in the survey — the most since the survey started two years ago — 60 percent indicated they will continue to delay capital expenditures for the next six months. Only one in four expects sales to pick up during that time.

Fifteen percent expect to see a decrease in employee counts heading into next year. About the same percentage expect to hire employees, according to Schwenke.

“Businesses do not expect we’re going to see a substantial upward trend,” she said. “They’re hoping we’ve hit bottom and we’re stabilizing over the next six months.”


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