Dismal March sales tax collections show effects of shutdown
DILLON — March sales tax numbers are in, and the mid-month shutdown took a big bite out of collections as expected.
In early March, businesses were gearing up for a busy spring break before they were suddenly shuttered when the county ordered widespread business closures March 16.
Businesses have been hit hard by the shutdown, and now the major dips in sales tax revenue offers a glimpse into the sudden financial crisis the towns are facing. Four towns, Breckenridge, Frisco, Silverthorne and Dillon saw downturns in sales tax revenue in March. This varied from about a 24% decrease in Silverthorne to a 49% decrease in Breckenridge.
However, the town of Blue River, which contains mainly residential establishments, saw an increase in sales tax revenue. Blue River pulled through with a 37% increase in March sales tax revenue. Town Manager Michelle Eddy said the bulk of the town’s revenue, about 50%, is from taxes when someone short-term rents their home and pays a lodging tax of 3.4% and a 8.875% sales tax.
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Silverthorne’s total March sales tax revenue declined by 24.5%, but the sector breakdown shows some types of businesses fared well during the shutdown. The largest increase in business comes from online retail, which increased by about 83%. Other sectors that fared well included building retail and services.
The town’s report noted that the online retail category continues to rise as a result of the Wayfair ruling, the 2018 U.S. Supreme Court decision that allows online retailers to charge state sales tax, even if the buyer is out of state. When Silverthorne’s online retail sales tax jumped by 800% in June 2019, town Revenue Administrator Jackie Balyeat explained that in the wake of the ruling, the town has been receiving additional taxes and licenses filed from retailers as a result of online shopping.
Compared with the other three towns in Summit County that saw reduced sales tax collections, Silverthorne saw the lowest rate of decline.
“The town of Silverthorne has several factors that make it less susceptible to changes in these conditions,” Balyeat wrote in an email. “We have many businesses that meet the definition of ‘essential’ under the established guidelines that were therefore able to remain open for the entire month. We have about 70% of our residents living here full time and therefore frequenting these essential business(es), and with our physical location immediately off the exit, we also were easily accessed by anyone traveling.”
Breckenridge showed the most significant decline in sales tax revenue with a 49% drop in the amount collected via the town’s 2.5% sales tax. Net taxable sales year to date showed about a 17% decline. The town experienced revenue decreases across all sectors: short-term lodging, restaurants and bars, marijuana sales, retail, construction, and grocery and liquor.
While some establishments that fell under the restaurant and bar sector were allowed to stay open for takeout and other services, this category experienced a 57% decline in collected sales taxes, just behind short-term lodging.
In Dillon, total March sales tax collections amounted to $297,325, which makes for about a 28% decline in sales tax revenue compared with March 2019. Year-to-date numbers show a less bleak figure of about minus 4%, as revenue saw year-to-date increases in January and February. Dillon’s lodging tax revenue took a 50% dip in March when compared with March of last year.
The town of Frisco finished March with a 25% reduction in sales tax revenue compared with March 2019. Year to date through March, sales taxes are down about 8%. Thirteen out of the town’s 17 sales tax categories showed March declines.
“It is no surprise that Vacation Rentals and Hotels & Inns and Recreation were the hardest hit in terms of dollars,” the town’s sales tax report read, noting that the town has reserves to cover economic downturns. “Grocery and Office were the few categories that showed any growth. Again you can contribute this to people buying office supplies to work from home and people stocking up on groceries. Currently, staff does not see this trend ending in the next couple of months.”
Frisco’s March lodging taxes show about a 69% decline.
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