The Town of Paonia will benefit from an unexpected increase in annual sales tax revenues.
Based on fiscal year 2017 annualized year-end budget numbers, the town estimates an increase of 6.9 percent in local sales tax revenue. While the 2017 budget projects revenues of $264,000, based on sales taxes collected through November, the town projects a year-end total of about $289,500 in local sales tax revenue.
"It's the highest it's been since 2014," said town finance officer Cindy Jones. That year the town received $290,302 in local sales taxes.
So where is the additional revenue coming from? While exact numbers weren't available, trade data provided by the town shows that in comparing 2016 and 2017 sales tax revenues for the 11 months from February through December, the biggest dollar increase is in retail sales, expected to increase just over 9 percent, from $155,602 in 2016 to $170,014 in 2017.
Revenue from utilities is up about 1.8 percent, from $28,822 to $29,334; and manufacturing is up about 6 percent, from $10,341 to $10,965. "Accommodation and food services" revenues were down 7.54 percent, from $34,568 in 2016, to $31,960 in 2017.
Of the estimated $16,000-$20,000 in increased revenue, $10,000 will go to year-end bonuses for town employees, with the balance going to the reserve fund (see "Paonia splits tax windfall between bonuses, reserve" in the Dec. 20 issue of the DCI).
During Dec. 12 discussion on what to do with the unallocated sales tax revenue, town treasurer Ross King said it's anyone's guess at this point if the trend will continue. Whether the increase is an anomaly or not, the town was very conservative in its sales tax estimates for 2018, said King. "This could be an aberration."
Hotchkiss will see an estimated 5.75 percent increase in town sales tax revenue, according to deputy clerk Ginger Redden. Like Paonia, with the exception of a couple of months when sales tax revenues were slightly down, those increases were reflected throughout the year.
Paonia voters will be asked to consider a one-percent sales tax increase next April. If passed, the increase in revenues will go to the general fund. The current town sales tax of two percent is split evenly between the general fund and the capital improvement fund.
The proposed increase is one of the ways the board has considered raising additional revenue in light of declining revenues related to a decrease in coal mining activities. To balance the 2017 budget, the board was forced to cut more than $160,000 from the general fund. Trustees also approved a three-percent impact fee on the town's enterprise funds for 2018, which will raise approximately $43,000 for street repairs.
The board also considered putting a property tax mill levy increase before voters. That would have generated about $40,000 in additional revenues beginning in 2019.
The town also receives a portion of Delta County sales tax dollars. The lowest amount collected since 2008 was $81,624 in 2012. The year-to-date amount collected as of November is $91,761, not including December's taxes. That number could come close to $100,000 after December's numbers are added in.
"I doubt that it's an aberration," said Elaine Brett, a retired business manager who is working with the town on the Space to Create initiative. Speaking at the Dec. 12 meeting, Brett said she's analyzed local taxes as part of the grant-writing process for the initiative, since that information can be a valuable metric in getting grants from state agencies.
"When everybody thought the world was falling apart because of the mine closures, the sales tax didn't drastically drop off," said Brett. "It kind of kept even." The up-tick, in part, is due to new businesses opening up, increased downtown traffic, and people working hard to improve the economic situation in town, said Brett "I think it's something we will continue to see."