Carbondale sales tax grows 4.8%; lodging tax hits record
Carbondale’s lodging tax revenue has hit a record as the town has gotten more short-term rentals to start paying up, while sales tax revenue grew, though less spectacularly.
Last year Carbondale’s sales tax revenues grew 4.8 percent over 2015. Meanwhile the town’s lodging tax, while a much smaller source of income, hit a record by topping $100,000 in revenue.
After major setbacks during the Great Recession, the town’s lodging tax has finally rebounded to top pre-recession numbers.
“Since 2011 the lodging tax revenue has more than doubled, which is an indication of a steady increase in overnight guests and visitors to Carbondale,” said Andrea Stewart, executive director of Carbondale Chamber of Commerce and Carbondale Tourism. “Tourism has become a vital part of the town’s economy, and we believe our PR and marketing efforts have helped many local businesses thrive thanks to more tourism dollars.”
“We’re thrilled to see more guests coming year-round for unique events like First Fridays, Mountain Fair and 5Point Film Festival,” said Darren Broome, chair of the Carbondale Tourism Board and owner of Aloha Mountain Cyclery. “Plus our convenient location to major ski resorts and abundant offering of mountain activity sets us at the top of many Colorado bucket lists.”
Stewart also attributed the lodging tax gains to the town getting more vacation rentals, such as homes listed on Airbnb, to pay into the tax.
In 2013 the number of properties paying into the lodging tax was at 10, then grew to 15 in 2014, and 34 in 2015.
The town now has 45 properties paying into the 2 percent lodging tax, which was passed by voters in 2003. That revenue is passed to the tourism board, an entity under the Carbondale Chamber’s umbrella. The tourism board uses that money for marketing and to promote Carbondale tourism.
Of those properties, 39 are vacation rentals.
The majority of this recent growth probably is from vacation rentals, as there haven’t been any major hotels added in the last few years, other than Marble Distillery’s lodging, said Renae Gustine, Carbondale’s finance director.
“We do try to reach out to these vendors, as they, by ordinance, are required to have a sales tax license and collect taxes,” Gustine wrote in an email.
“The chamber has been excellent in helping reach out to vendors with fliers and education on the use of the lodging tax funds,” said Gustine. “They can also join the chamber, which increases the consumer base that is reached.”
Those short-term rentals, which are popular with tourists, add to Carbondale’s variety of lodging options for visitors, said Stewart.
“I’d love to think that every [short term vacation rental] is paying in, but I’m sure that’s not the case. I’m sure there’s room to grow,” she said.
In terms of the sales tax, the previous couple of years were stronger, with growth at 7.5 percent in 2015 and 8.3 percent in 2014.
With its 4.8 percent growth, Carbondale’s total sales tax revenue came in at a little more than $4 million in 2016.
Over the last several years, January has typically been the strongest month for Carbondale’s sales tax, and January 2016 saw a 10 percent increase in revenue.
The biggest chunks of sales tax revenue come from retail food, retail sales, and restaurants and bars, all of which saw increases in 2016.
Bringing in $718,612, retail sales in particular have increased about 38 percent since 2012.
That 4.8 percent growth in sales tax revenue came in just above the 4-percent growth the town had budgeted for 2016. This year Carbondale budgeted a more conservative 2 percent sales tax revenue increase, and so far the growth has been at about 1.9 percent, said Town Manager Jay Harrington.
In spring and summer, the town typically sees a boost from its “use tax,” which comes from construction material being purchased.
Though it’s been delayed four times over the last year, if the proposed City Market goes forward as planned, the town expects to see a boost from use tax stemming from that project. However, the project wouldn’t be completed until, at the earliest, the end of 2017. So sales tax from the grocery store’s operations won’t affect the town’s sales tax revenue until 2018.
“I think a lot will depend on City Market coming out of the ground like it’s planned and what gets developed at City Market’s current location” at the southwest corner of Main Street and Colorado 133.
Businesses have been performing well, but Carbondale has a limited sales tax base for a population of 6,400, said Harrington.
Other than the City Market, the town also isn’t looking at any new sales tax generators coming online, and the construction cycles are difficult to predict, he said.
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