Category Archives: Sales Tax
August’s local 1% tax distribution came out last Wednesday. Sit down. We had the first decline in 20 months. The August distribution, which comprises June large monthly taxpayers (3/4ths) and 2nd quarter smaller quarterly filers (1/4th) came in at $46.29 million, 2.5% below last August’s $47.47 million. Still, when you think about it, we knew the Sequestration was going to ding us about 1% to 2% for the entire year, so the decline isn’t really that shocking.
We need to remember last August was up 8% over 2011 and August 2011 was up 9.9% over August 2010. Compared to August 2009 the statewide $46.29 million is up 28%. In fact, our seasonally adjusted series over the past two months, adjusting for monthly seasonal effects, is up about 5%, after it fell 6% in June (Chart 1, below).
Also, negatively affecting taxable sales is the slowdown at Rio Tinto Copper mine. This is probably hitting business investment taxable purchases.
How about jobs? After two months of a major slowdown began, July employment shifted back from 1.7% growth to 3.5%.(http://jobs.utah.gov/wi/press/2001press/ratecurrent.pdf ). This implies that the slowdown may be limited to just the 2nd quarter. This remains to be seen, however. We hear that some of the slowdown in job growth may be just due to number crunchers’ back east adjustments.
Note that the August distribution is the last month of fiscal year 2012-13. So the fiscal year-to-date number in the 4th column is the latest fiscal year growth rate. Most cities dropped 1% in the fiscal year growth due just to July’s distribution decline since last month.
I have included the new population numbers for 2013. Remember 1/2 of your growth is due to 1/2 of the % change in the last column (unless you are a hold-harmless city).
Due to the 50/50 formula 1/2 of say Lehi’s 8% distribution was down 2.5% (-1.25%), so the other half must have been up more than 16% to get to an 8% overall growth. If your decline was below -2.5% your point-of-sale decline must have been below 1.25% to combine for your overall growth rate.
July’s Distribution is out about a week earlier than last year, but the distribution was still up 5.9% at $37.92 million, compared to $35.82 million last year. July’s distribution of the 1% local sales tax represents sales largely from May monthly taxpayers. Across the nation car and truck sales were strong as was new home construction.
Several large cities did not fare as well as some medium size cities in the July distribution. For example, Salt Lake City (0.4%), Sandy (0.7%) and Ogden (2.1%) did not perform as well as Draper (11.8%), South Jordan(18%). We initially thought this might be due to the use of the 2013 population numbers in the 50% population/ 50% point-of-sale distribution formula, which were inserted into last month’s distribution. But this does not explain all the variation, so most of the difference must be due to May’s point-of-sale performance.
I added a table with population so you can check out the new 2013 population differences. Just subtract how much your population percent change is from the statewide percent change and divide by 2 to estimate your monthly impact.
For example, Lehi’s growth of 5.04% less the statewide average of 1.35% divided by 2 equals a monthly increase of 1.85% in FY2014 for Lehi. See the second chart below.
Hope this helps. 5.9% is close to our forecast.
The 1% local sales tax rose only 0.4% in June to $34.9 million for April sales, lower than our expectations. However, for the 19 cities we track, 16 of them did better than the average statewide growth.
Salt Lake City, the largest city in the state, made a 2.9% gain in the June distribution. South Jordan, Draper and Sandy saw their sales increase in double-digits (32.5%, 14.6%, and 10.7%, respectively). West Valley’s sales rose only 1.8%. Curiously, Murray’s distribution dropped 31.2%.
Two factors in the process may have impacted this month’s distribution for an individual city. First, the distribution came out last Friday (June 21), perhaps a bit early. Second, the hold-harmless provisions impacted this month’s distribution by adding approximately $2.5 million to South Salt Lake’s distribution, $485,000 to Riverdale, $57,000 to Alta and $36,000 to Brian Head. These credits had to come from other cities. The adjustments are made in June for the entire fiscal year to minimize the impact for the other months. The sum of these credits, $3.1 million, is about 9% of June’s distribution, but is less than 1% per month over the entire year.
On a county-by-county basis, Salt Lake County’s sales rose 0.5%, Davis County’s rose 1.8%, Utah County’s rose 2.7%, Weber’s 1.2% and Washington’s rose by 4.8%.
May’s distribution came out today at $45.62 million, up 3.0% from last year’s $44.31 million (Table 1). This distribution represents monthly returns from March sales and first quarterly sales in 2013. It follows a 4.0% gain in February and a 15.3% jump in January sales. For the first quarter of 2013, the statewide growth ran 6.9% ahead of last year.
Nationwide, March retail sales and food services posted a 1.5% gain over the prior year.
Another important milestone occurred when we seasonally adjust the May distribution to $42.24 million, it is only 0.5% lower than the peak distribution of May 2007 at $42.44 million (Chart 1).
Two major cities saw gains of more than 10% in May — Sandy at 10.5% and St. George at 11.7% (Chart 2). Both of these cities’ fiscal year-to-date growth rate are close to 10%. Sandy’s growth may be partially due to the large sporting goods store opening this year. St. George’s may be due to a hot construction market and a resumption of fast-desert, long-term growth.
Three other cities demonstrated better than average growth: West Valley (up 6.6%), West Jordan (up 5.6%), and Tooele (up (6.8%).
Salt Lake City’s growth rate all but stalled for March sales, but its 6.5% year-to-date growth indicates strength from its City Creek and other recent developments.
Soft growth, between 0 and 4% was the rule in cities in Utah, Davis and Weber counties. Park City’s distribution took a serious dip, down 15.4%.
If trends continue, expect the first month of the new quarter, June’s distribution for April sales to pick up.
April’s 1% local sales tax brought in a total of $34.66 million statewide, up 4% over the same period last year. April’s distribution represents February 2013 sales. Following a 15% month (January sales) the 4% growth for February sales may not be surprising.
A better metric would be to look at the last 3 month’s growth rate, which is up 7.3% for the statewide local sales tax. Fiscal year-to-date growth of 6.6% right on with our forecast of CY2013.
Draper’s 14.1% growth led the other major cities we track. South Jordan’s 11% increase placed second. Salt Lake City’s distribution increased 4.8%, slightly ahead of the State’s 4% growth.
Bountiful and Layton, had increases similar to Salt Lake City.
Farmington’s distribution increased nearly 9.6% (Station Park mall), very close to Lehi’s 10% (commercial & retail growth) and St. George’s 10.3% (housing rebound) growth rate.
The Tax Commission released its distributions on Monday. This is the largest distribution of the year, representing not only December sales, but also sales for fourth calendar quarter accounts and small annual accounts. The total distribution of the 1% local tax of $48.22 million was up 4.2% compared to a year earlier. This was a better showing than earlier reports a week ago of a possible 2.5% decline. Distributions are up 5.7% for the cities’ fiscal year. This is slightly lower than the 6.6% forecast we made for CY2013 last November.
At $4.89 million, Salt Lake City, saw its distribution increase 8.2% for December sales. This may have been partially due to the new City Creek development. Sandy’s 13.3% gain may have been forged by the addition of the new Scheels store. Similarly, Farmington’s 7.8% gain probably reflected new restaurants at Station Park. Other cities where growth beat 6% were: Draper (6.8%), South Jordan (7.1%), Bountiful (8.1%) and St. George (6.6%).
Given the hits to consumer confidence in December as the federal government came dealt with its “fiscal cliff”, it is probably no wonder that cities with large stakes in auto sales like Orem and Murray saw low growth in December.
Statewide the 1% local sales tax was up 9.6% for December at $35.38 million. Most major cities fared well except for Sandy and Murray. Salt Lake City’s distribution was up 9.2% at $3.66 million, very close to the statewide growth. Draper, South Jordan, Provo, Bountiful, and Layton had distribution growth ranging from 10.7% to 14.3%.
Boosting taxable sales growth is the resurgence in residential construction, where new permit values were up 39% statewide and 121% in Salt Lake County for the month of October. Construction growth tends to drive taxable sales from two to four quarters out into the future, based on our econometric models.
Distributions for the 1% local sales tax for November (September sales) were up 4.6% at $42.4 million over last year’s $40.5 million. This followed a nearly 13% increase in last month’s distribution, so hang on to your hat. For the first three months of FY2013 distributions were up a healthy 7.2%. This is a bit shy of our FY2013 forecast of 7.8% made last December.
Several large cities fared pretty well in the November distribution. Salt Lake City saw its distribution rise 6.4% to $4.25 million. Sandy’s sales in September rose 14%, possibly due to a new, large retailer. Draper’s sales rose 10.2%. South Jordan’s -7% distribution suggests some technical problems with a few accounts (Draper’s October distribution was up 27%).
Sales in Park City and St. George ebbed a bit in September, both at about 7%, but still stronger than the state average.
Sales in Utah and Davis counties were mixed. Farmington’s sales appear to have peaked as Station Park expansion slowed down temporarily. Lehi sales rose almost 13% due to lots of construction activity in northern Utah county.
DOUG MACDONALD – October 1% local sales tax distributions beat expectations by increasing 12.7% over the same period last year. The total local sales tax distributions of $40.56 million by the Tax Commission in October, representing sales for August in Utah were almost $5 million higher than the $36 million distributed last year at the same time
Double-digit sales were common in Salt Lake County cities. Salt Lake’s distribution of $4.18 million was up 13.5% and West Valley’s distribution was up 12.6%. Murray’s distribution was up 16.5%, suggesting auto and light truck sales did well in August. Higher auto sales were evident in September across the nation (see charts from the New York Times), suggesting next months distribution will also do well. September 2012 auto sales grew almost 15% in the U.S., the highest in four years.
Tourist-heavy cities ilk St. George (+15.6%) and Park City (+19.7%) also fared well in August.
For the first two months of the cities’ fiscal year 2013, local tax distributions were up 8.7%, slightly ahead of our December forecast of 7.9%.
Economic Policy Analyst
September’s distribution the 1% local sales tax came out earlier this week, and July turned out a slower growth month than the prior two months. Statewide the 1% took in $32.7 million for July sales, putting September distributions, up 4.2%.
Reports out today indicated that August sales nationwide rose 0.5% above July, pretty good, but much of the increase was due to increases of gasoline prices.
Also, nationally, both consumer confidence indices rose significantly suggesting increased spending over the next two months. See chart below from Moody’s Economy.com.
This was the first fiscal month of fiscal year 2013. For fiscal year 2012 growth was a respectable 8.0%. (We predicted 7.9% last December and 6.8% way back in December 2010).
Slower growth for one month does not necessarily mark a trend since we have tended to have one month in three be near zero over the past year. So if our slowest month is 4% that would be good. This is most likely due to Tax Commission cut offs and processing.
Economic Policy Analyst