Sales tax take by city in dive

Grand Junction’s sales- and use-tax revenue continued its precipitous decline in May, plunging 14 percent compared to the same time last year as shoppers maintained a tight grip on their pocketbooks.

The city collected $3.8 million in tax receipts last month for revenue generated in April, compared with $4.4 million in May 2008, according to Jodi Romero, the city’s financial operations manager.

Year-to-date, sales- and use-tax revenue is down 12 percent, from $24.3 million in 2008 to $21.3 million this year.

The numbers are particularly skewed because use tax collected in the first five months of the year is off 37 percent compared to last year, Romero said. The bulk of that revenue comes from the construction and energy industries, two sectors in which activity has slowed considerably.

“We’re hoping we’re bottoming out now,” Romero said.

She said there are indications that people are starting to bump up their spending. In April, sales-tax revenue alone was down 19 percent and sales- and use-tax combined was down 16 percent compared to April 2008. Those numbers improved slightly in May, with sales-tax revenue down 15 percent and sales- and use-tax combined down 14 percent compared to May 2008.

“We’re optimistic that some of the retail spending will begin to recover,” Romero said, adding that she hopes that by the end of the year it will equal 2008 levels.

Diane Schwenke, president of the Grand Junction Area Chamber of Commerce, is hopeful, as well. But she isn’t ready to predict when or how quickly that will happen.

Small business owners told her that January, February and March were “deadly,” April was “not quite as bad” and May was “still kind of mixed.” One in particular told her last week that he expects another drop in sales before a rise.

Schwenke said economy watchers should expect that any bump in tax revenue will fall short of last year’s numbers.

“I’m hopeful that maybe we’ll see something year-end in terms of starting to come back, but when we do see it, it won’t be back to where we were. It’ll be, ‘Well, maybe we’re down 5 percent,’ ” she said.

She added that while Grand Junction was one of the last communities to be pulled in by the recession, it may not emerge as quickly as other areas.

“It’s hard to forecast at this point,” she said. “My crystal ball is as murky as everyone else’s.”

The decline in revenue will wipe out Romero’s projection, made last summer before the economy tanked, of 8.5 percent sales- and use-tax growth. City budget managers will adjust that projection later this summer as they put together the city’s 2010 budget.

The city has cut $6 million from its budget this year that officials say should cover the drop in sales-tax revenue.

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