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Surging sales tax revenues don’t mean windfall for Glenwood

Glenwood Springs’ sales tax rebound continued in March, but a city official warns that looks can be deceiving.Major growth in sales tax revenues – spurred in large part by the opening of the Glenwood Meadows commercial development in October – doesn’t mean the city is rolling in dough.”What I think is deceiving to people is they think we’ve got a lot of extra money,” said city finance director Mike Harman.In fact, the city budgeted for the increases and is relying on them to make ends meet, he said.”We’re pretty much right on track with what was projected,” Harman said. “People don’t understand that. They think it’s a windfall.”In March, the city took in $1.15 million in sales tax revenues, up 34.5 percent from the same month a year earlier. That comes after 40.5 percent and 39.5 percent increases in January and February, respectively.For the first three months as a whole, sales tax revenue grew 37.6 percent. The city had budgeted for a 32 percent increase for the year as a whole.The above-budget growth came during some of the slowest months of the year, and a small setback in one of the busier months could eliminate that cushion. And the city is counting on the projected 2006 increase to help ease it out of a budget crunch that has come on over several years, as a result of the terrorist attacks of 2001, the city’s Coal Seam Fire in 2002 and the national economic downturn.Sales tax income fell significantly following those setbacks. It wasn’t until last year that revenues exceeded their peak in 2001, as the city’s economy began to turn around and its revenue increases were buoyed toward the end of the year by Glenwood Meadows.”A big increase in the percentages is getting us back to where we should be,” Harman said.The city also needs to restore fund balances that helped it get through the lean years, he said.Harman noted that, along with the new revenues, the city faces the prospect of having to pay hundreds of thousands of dollars to Glenwood Meadows businesses under its economic development rebate program (see story, page 1).In addition, the city also is beginning to have to make payments to the Downtown Development Authority under the DDA’s tax increment financing program. That program calls for half of all sales tax revenue growth in the DDA district to go to the DDA, which hopes to use the money for purposes such as a parking structure.For the first few years, sales tax in the district failed to exceed a base year amount, so the city didn’t have to pay the DDA anything, Harman said. But last year it paid back $8,168, and this year the payback will be $92,949.As the city’s sales tax revenues continue to surge, so does its lodging tax income. It totaled about $55,000 in March, up 21.2 percent over March 2006. So far this year, the tax has brought in a total of 19 percent over the same period a year earlier.Whereas once Glenwood benefited from a week or so of spring break business in March, school districts around the state are taking breaks at different times of the month, said Stephanie Keister, tourism marketing director for the Glenwood Springs Chamber Resort Association. At the same time, the city is getting an increasing amount of business from communities such as Grand Junction and Colorado Springs, rather than being just a backyard playground for the Denver area, she said.”I think that’s probably making (March) go from a busy week to a busy month,” she said.Contact Dennis Webb: 945-8515, ext. 516dwebb@postindependent.com

Glenwood Springs collects a 3.7 percent sales tax. It is distributed based on the following formula: 1.5 percent, general fund 1 percent, acquisitions and improvements 0.5 percent, capital projects 0.5 percent, streets 0.2 percent, bus tax


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