Figures show that tourism still pumps the local economy
By Carolyn Sackariason, July 13, 2008, The Aspen Times
ASPEN – Even though Aspen government is bracing for tough economic times in the near future, it is still enjoying revenue increases in sales and lodging taxes.
In his May consumption tax report, City Hall Finance Director Don Taylor said sales tax collections for May are up 7.5 percent from the same month in 2007 and year-to-date collections through May are up 10 percent from the first five months last year.
“In spite of recent national trends, Aspen’s retail economy is continuing its positive economic trend with significant increases realized in almost all industry sectors,” Taylor wrote.
The largest contributor to the city’s tax revenues – tourist accommodations – is reflecting what Taylor described as “a very healthy” 12.6 percent increase year to date. The second largest contributor to the city’s coffers – restaurants and bars – is reflecting a 6.8 percent year-to-date increase.
“In fact, all of the major contributors to our tax revenues reflected significant year-to-date increases at the end of May,” Taylor wrote.
May retail sales are $17,544,393 – representing a 6.6 percent increase in total retail sales compared to 2007. Year-to-date retail sales are $235,970,625 – a 10 percent increase over last year.
Lodging tax revenues also have increased over last year. Collections for May are up 3 percent from the same month in 2007. Year-to-date collections through May are up 13 percent from 2007.
While consumption tax revenue so far this year is experiencing upward trends, the real estate market is not performing as well as city financiers had predicted.
The year-to-date Real Estate Transfer Tax (RETT) collections which fund the Wheeler Opera House are 38 percent behind collections for the same period last year, and they are 21 percent behind budget. Revenue collections through June for the Wheeler RETT amount to $1,632,550.
The year-to-date real estate transfer tax revenue that goes into the housing fund is 37 percent behind collections for the same period in 2007 and 31 percent behind budget. Revenue collections through June for the housing RETT amount to $3,023,625.
While both of the RETTs are down from 2005 and 2006, they are still reflecting increases from the comparable figures of 2004 and prior years. Real estate prices and sales reached a peak during 2005 and 2006, and wide fluctuations in the RETT are the norm because it is a volatile tax.
Voters will likely be asked to renew both the sales tax and the RETT this November, since both are set to expire in the coming years. Voters also will likely be asked to borrow against them in the form of bonds, which could be as much as $75 million, to pay for affordable housing.
Meanwhile, city officials and elected leaders expect a downturn in the economy and are budgeting conservatively for 2009. They expect because of high fuel prices, the airline industry will charge more for people to fly into Aspen, thus hurting the tourism economy here. They are budgeting for only a 2 percent increase in sales tax revenue.