If current trends continue Summit County could see its first significant boost in sales tax revenue since the U.S. economy peaked in 2007.
On Tuesday during a Summit County Commission workshop, Summit County Finance Department director Marty Ferris said July sales tax revenues increased by a whopping 27 percent over July 2012. The spike also has contributed to an overall year to date increase of more than 13 percent, or $325,000, compared to this time last year.
County manager Gary Martinez said the news about increased sales tax revenues is a positive sign going into budget season. Although the county has experienced one period of year over year sales tax revenue growth since the 2008 economic downturn — when 2011 sales tax revenue edged 2010 revenues by about 2 percent — sales tax numbers have largely been on the decline during the last five years, Martinez said.
“2013 represents the first year of consistent revenue growth across all (sales tax) categories since 2007,” Martinez said. “I think it is representative of the resort areas recovering faster than some of the incorporated municipalities in the county.”
In addition to collecting sales taxes on goods and services, the county also collects sales taxes on utilities, short-term rentals and telecommunications, such as phone, cable and Internet services, all of which are up in 2013, Ferris said.
Unlike other counties in the state, Summit County only receives sales tax revenue from unincorporated areas, including the more populous Keystone and Copper Mountain resorts, as well as the more rural parts of the county, said Commission Chairman Thomas Davidson.
But Ferris cautioned that July’s surge in sales tax revenue doesn’t necessarily mean the county will recover overnight from the down economy of the last five years.
Sales tax accounts for about 14 percent of the general fund budget and represents the third largest source of revenue for the county. Property taxes contribute the largest base of funds, but those revenues will be down going into 2014 following another unfavorable property assessment by the state.
In 2011, Summit County’s assessed property valuation dropped by 17.2 percent. The county took another hit of 3.6 percent in 2013. Appraisals are good for two years.
“With property taxes representing about 35 percent of the county’s revenue, we’re going to continue to feel the effects of negative valuation in 2013 and 2014,” Ferris said. “Improved sales taxes really just offset the losses to property taxes.”
The two other primary sources of county funds, fees for service and grants, are projected to remain steady going into 2014, Ferris said.