Sales tax revenue in August continues trend of 2022 surpassing 2021

This year, sales tax revenue in Steamboat Springs has outperformed 2021’s totals every month so far, and August’s final sales tax report continues the trend, showing a 10.5% increase over August of last year.

Construction projects have helped buoy the city’s sales tax revenue, especially after the end of winter when revenues slowed in the other categories. Though sales tax revenues slowed down a bit going into summer, every category except marijuana has continued to outperform last year.

For the past five years, August has represented about 8% of each year’s annual sales tax collections. This year, sales tax revenue in August was a little over $3 million, and the year-to-date increase in sales tax revenue through the end of August was a little over 21%.

Construction and home improvement sales tax revenue was up 44.1% and sporting goods was 32% higher than August of last year.

The miscellaneous retail category was up 12%. Both the grocery stores (plus other food sellers) and liquor stores categories were up by about 5.5%. Both the utilities and restaurants categories were about 3% higher than last year. 

The marijuana category was down by about 16.5%, continuing a trend seen all year. Marijuana sales tax has been down every month in 2022, and the city has speculated that wholesale prices for marijuana have dropped statewide and because more dispensaries opened in nearby towns so fewer people have been traveling to Steamboat’s marijuana stores. 

But the $43,000 in marijuana sales tax revenue for August accounts for only about 1.5% of the month’s collections. 

A breakdown of the city’s August sales tax revenue by category, Oct. 20, 2022.
City of Steamboat Springs/ Courtesy

The accommodations tax, which is spent primarily on local trail projects, yielded about the same amount as August last year at $116,627 — $36 more than 2021. The year-to-date total for the accommodation tax, however, is almost 35% higher than last year — a testament to the robust winter months early in the year when accommodation tax revenue was up by almost 66% at the end of March. Since April, accommodation tax revenue has stayed relatively in-line with 2021.

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The city expects $2 million in the accommodation tax reserve by the end of 2022— after spending $600,000 on trails, $30,000 on trail marketing and $30,000 on capital improvements at Haymaker Golf Course, as is required by the 2A accommodations tax ballot language passed by voters in 2013.

City Council recently decided to spend the accommodation tax reserves on unfunded capital projects that fit the criteria described in the 1986 public accommodations tax ballot question.

A pie chart breaking down the percentages of the city’s sales tax revenue by category, Oct. 20, 2022.
City of Steamboat Springs/ Courtesy

The building use tax, which greatly fluctuates depending on the number of building permits issued, use tax reconciliations completed, and the size and number of developments in the city, was way down in August by 58%, but big swings are common with this tax. June, for example, saw a 218% increase in building use tax revenue. 

Overall, building use tax is up 10% year-to-date compared to 2021. 

When comparing sales tax revenue by area, sales tax collections near the mountain were down by about 14%. The mountain area saw sales tax collections between 40-60% higher than last year for the first three months of the year, but the onset of summer and massive construction projects have since kept business below last year’s numbers. 

After a streak of outperforming the previous year, sales tax revenue from the mountain area has slumped since April.
City of Steamboat Springs/Courtesy

Every other area has seen higher sales tax revenue than 2021. The “out of town” area saw about 39% more sales tax revenue than last year, continuing a trend caused by an increase in outside construction and retail vendors engaged in business.

The west Steamboat area yielded about 17% more sales tax revenue than last year, while the downtown and Highway 40 corridor area each yielded about 8% more than 2021. The regional area saw an increase of about 20% in sales tax revenue. 

While setting next year’s budget, the city projected about $38.5 million in sales tax revenue by the end of 2022, or about 16% higher than last year. 

But the city is bracing for an estimated 4% drop in sales tax revenue for 2023. 

The city’s projected sales tax revenue for the end of 2022 compared to 2021, Oct. 20, 2022.
City of Steamboat Springs/ screenshot

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