Category Archives: Sales Tax
This month’s statewide 1% local distribution of $33.3 million came out yesterday and was up 7.7% percent compared to last year. This was very close to the 8-month fiscal year-to-date rate of 7.3%, which is very close to our upper-end forecast.
The 3-month averages dropped quite a bit because the big 20.2% gain in the January distribution fell out.
Notably, Lehi, Bountiful, Murray, Provo, Park City and St. George distributions saw double-digits growth. Extra growth probably stems from car and truck sales and construction activity.
For all the April numbers for SLC, Sandy, West Valley, Murray, Draper, South Jordan, West Jordan, Ogden, Provo, Orem, Lehi, Bountiful, Clearfield, Layton, Park City, and St. George, Click Here.
New car and truck sales rose almost 16% in February 2012 compared to the same month a year ago.[i] Auto sales were up almost 24% as consumers snapped up fuel-efficient models due to higher gasoline prices. Truck sales, up nearly 8%, were pulled up by Ford’s F-series trucks, which shot up 26%. Ford F-series were also the most popular make by volume, selling 47,273. Next highest were Toyota’s Camry, which sold 34,542. Other most popular makes with high growth rates in February were:
1) Ford Focus, up 115%,
2) Nissan Altima, up 58%,
3) Toyota Prius, up 52%,
4) Honda Civic, up 42%,
5) Toyota Camry, up 27%.
Among automakers, Chrysler sold 40% more autos in February 2012 than in 2011 at 133,521. The largest seller, General Motors, sold 209,306 autos, but up only 1% from last year. Foreign makes like Kia, Volkswagen and BMW registered more than 30% gains.
Analysts were generally optimistic about 2012’s continued strong auto sales. “We don’t see any major risks to industry sales going below 14 million this year (up 12%),” said Jesse Toprak from TrueCar.com, which tracks sales and pricing.[ii] U.S. car and truck sales troughed at 10.4 million sales in 2009 and then rose to 12.5 million sales by last year.[iii] Automakers are also happy to get higher profits by giving away fewer incentives and all this despite higher gasoline prices.
[i] “Auto Sales Pick Up Pace Despite Gas Prices”, Nick Bunkley, New York Times, March 2, 2012.
As expected, following the 15.9% increase last month, the December 1% sales tax distributed to local governments fell by 1.7%. Remember, the December distribution represents mainly October sales.
On a fiscal year-to-date basis (September through December) the 1% tax is up 5.5%, indicating an economy that is turning around. Our latest “baseline” forecast is looking for 7.9% growth in FY2012, with a “pessimistic” estimate of 2.4% (if there is a European recession).
The largest city in the state, Salt Lake City, saw its distribution fall 0.4%, not as far down as the statewide average. Murray’s distribution was up 9.3%, perhaps due to continued rebounding in auto and truck sales.
Recent data from local sales tax distributions and taxable sale from the Tax Commission paint a Utah economy that is shifting into second gear. This was confirmed by the Commerce Department third quarter GDP report, which estimates that sales and services grew 2.5%. In Utah, taxable sales are 5% to 6% ahead of last year’s levels. Utah consumers, at least those who have steady incomes, have put off buying new cars and trucks since the financial crisis in 2008. So recently some of that pent-up demand was unleashed. The latest taxable sales figures from the second quarter of 2011 indicate that motor vehicle sales were up 25% (see table). Apparel store sales were up 11% in the second quarter. Apparently, those consumers with steady incomes are replenishing their F-150s and clothing wardrobes.
Behind the increased spending on autos and clothes is a job market that is shifting into second gear. Following the 5% decline in 2009 and a 0.6% drop in 2010, Utah job growth will range between 2.2% and 2.5% in 2011. In fact, the August and September increases in job growth in Utah were up 2.9% and 2.8%, respectively (see chart below). Hot sectors, increasing 3% or more so far through September 2011 were: natural resources & mining (+6.2%), manufacturing (+5.7%), professional and business services (+7%), and leisure and hospitality services (+4.2%). Construction and government employment, which fell 0.4% and 0.8%, respectively, dragged down job market growth in September 2011.
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As the legislative season quickly approaches, crunch time is upon us. We had several meetings this week to discuss legislative issues that are included in the proactive legislative agenda that has been established by the ULCT Policy Committee. Here is a quick run-down of the items/meetings.
The land use taskforce met again this week, and they are quickly settling in on all of the details related to that agenda. We will be sending out final bill drafts in short order, but it should be a pretty small list. So far, we have successfully negotiated away a bill dealing with code enforcement, settled on agreed language for a bill to clarify legal provisions related to apartment dwellings and the number of unrelated individuals that can live in a single-unit, settled on a bill that will simply require us to provide notice (if requested) for developmental standard changes, and pushed off several other items that were being pursued by the development community.
We are still in the middle of negotiations on a few other items including: Transfer of Development Rights (TDR) process and billboard regulation issues. We will keep you apprised of the progress on those items.
In addition to the land-use taskforce, we also had an internal mid-week meeting with city manager’s group, attorney’s group, and others to discuss several other items that we are following. Those items include: tax distribution and tax base issues, transportation funding issues, justice court judge retirement issues and several other items. The most important news out of that meeting is that we were able to successfully push off the legislative attempt to push tax distribution changes. Several key legislators that are engaged in that discussion have agreed to work with us on a better identification of the concerns they have (predominantly economic development concerns) and a more extensive evaluation of possible solutions to the perceived problems. So that issue won’t be discussed during this month’s interim meetings, as we continue to discuss the item further. We would like to thank, Rep. Greg Hughes, Sen. Curt Bramble, Sen. Stuart Adams, and Sen. Howard Stephenson for their willingness to work with us on these issues.
Lastly we had a great opportunity to meet with several key legislators on some of our top issues. In addition to the names listed above, we met with Sen. Adams on economic development and tax issues, Sen. Stevenson on our pawnshop bill and ongoing transportation initiatives, Sen. Niederhauser on TDR’s and land-use issues, and continued our ongoing conversations with Rep. Sanpei on a land-use issue he is helping us with in Provo.
Lastly, we had a great opportunity to celebrate Veteran’s Day this week and also had the Governor’s Annual Gala to cap off the end of the week… all-in all a very productive week.
This week will be one of the same, with meetings scheduled all week to include all-day interims on Wednesday, appropriations meetings on Tuesday and several other internal meetings to discuss specific issues for the ULCT membership throughout the week to include further discussions on land-use, billboard issues and transportation funding/coordination issues.
Please call or write with any questions you may have.
Your ULCT Lobby Team.
Legislative Policy Meetings
We started of the week with a great Legislative Policy Meeting (thanks to those who were able to attend). Continuing to follow our new meeting platform, we focused on just a few issues instead of trying to fit everything in to each meeting. This meeting’s focus was on the recent legislative proposal to redistribute sales tax and also on recent Utah State Retirement findings that would require the payment of retirement contributions for part-time employees if they earn over a certain amount. Each item received much debate. Most expressing concern on redistribution concepts and requests to find more information on the retirement issue and look at legislation to prevent such issues in the future.
- Broadband Deployment
The Governor’s staff was the first one to present to the Committee. The focus of their presentation was on the two areas of the Broadband advisory council mission. The first is the mapping of broadband availability in Utah. They spoke on the progress they have made so far in this aspect. The second was planning and coordination of future broadband deployment with an emphasis on getting broadband to the underserved and rural areas of the state. They also mentioned this as an economic development tool for all of these areas.
Steve Fletcher from DTS then presented on what his department is doing to increase broadband deployment in Utah. He spoke quickly on how this is an economic development tool and how that is important to Utah.
The ULCT staff spoke next, and gave a quick history as to why he was placed on the board. Lincoln spoke on the fact that some coordination of fiber deployment is taking place currently. He later spoke on the fact that coordination and trading of fiber is going on currently due to the stand out effort of certain individuals. He later commented that they might want to formalize some of the trades and efforts that are being made by a few. He also affirmed these efforts need to be done with both public and private entities. He also spoke to the fact that this is a great area to enter into public private partnerships where both parties will see a benefit.
Lynn Yocum from UDOT presented on all the good things that they have been doing at UDOT as far as making smart roads. She gave a few examples of trades that have taken place and helped UDOT expand their reach. By doing this she has been able to do more with less as mandated by the governor.
Mike Peterson from UEA gave a presentation on their current infrastructure. He showed the state and all of the schools and libraries they have connected. He then spoke on the E-rate program and how they are able to receive nearly two dollars for every one that they use on long term leases from private entities to connect their buildings.
The presentation was good in educating legislator on the Broadband deployment that is currently going on in Utah. It also gave them a scope of the importance of Broadband to Utah.
- Natural Resources – State Parks
The Natural Resources Interim Committee discussed the future of Utah state parks. The Legislature reduced the Division of Utah State Parks & Recreation’s budget from FY 2010 from $12.2 million to $6.7 million in FY 2012 and the legislature wants to wean state parks off of the general fund via privatization, staff reduction, and turning park management over to local governments. Every local government contacted by the Division, however, declined management due to the financial obligations. The Division’s director and dozens of supporters advocated for renewed funding and two legislators opined that the value of state parks cannot be quantified and expressed support for legislative funding of state parks. Nevertheless, other legislators voiced concern that federal budget cuts would continue to strain the state budget. Many cities and residents depend on the economic benefits and cultural value of the state parks. Consequently, ULCT will monitor the state park dialogue and how much the legislature promotes relinquishing state parks to local or private control.
- Sales Tax Distribution
The Revenue and Tax Committee briefly discussed sales tax distribution. Due to time constraints, the committee did not take public comment and instead pushed the item to November’s interim agenda. The committee did, however, get a brief explanation of a possible bill from Rep. Greg Hughes and Rep. Jim Nielsen, which would change the local distribution formula from 50-50 (50% point of sale and 50% population) to a 50-25-25 (50% population, 25% point of sale and 25% total wages within the city). Numbers were provided as a part of that presentation and further analysis will be done by ULCT staff to better understand the full effect of any proposed change. Cities have expressed deep concern over the proposal and the ULCT will continue to work with the Legislature to make our concerns known.
- Meeting with Legislators on ULCT initiated pawnshop legislation to deal with unintended consequences to a bill from the 2011 session
- Meeting with Legislators on a bill to modify the land-use code dealing with rentals to multiple families (number of unrelated individuals that can live together)
- Meeting with legislators on retirement issues referenced above
- Meeting with UDOT to discuss B&C allocation issues
The week of October 24th will be a busy week for the ULCT with our land use taskforce reconvening to discuss proposed legislation for 2012. We will also be meeting with SL County on township/duplication of services issues in Salt Lake County and cities within SL County, and the Utah Intergovernmental Roundtable summit, which will focus on the future of agriculture in Utah. We will have a full report on these and other meetings of the week on Friday. Until then, enjoy your week.
Please call if you have any questions.
Your ULCT Legislative Team
The quarterly taxable sales figures from Q4 of 2010 are in from the Utah State Tax Commission, and we are seeing growth in most areas. Graphs of quarterly sales give us a better picture of the actual economic trends than graphs based on monthly data, since the monthly data can be a little more volatile (just look at June 2010).
Total taxable sales grew by nearly 3%. The Tourism category grew almost 6%, the Motor Vehicle Sales category grew nearly 14%, and the Business Investment category grew a little over 9%. These three categories represent almost half of all taxable sales in Utah.
The Utah State Tax Commission has updated its taxable sales data through the end of last year, and the research robots at ULCT have put the data into a nice pretty graph form for your consumption!
Click on it for a larger image
*This graph uses categories created by the ULCT economic research team including: Tourism (Amusement & Recreation+Hotel & Lodging+ Retail Eating & Drinking), Motor Vehicle Sales, Home Related Sales (Building & Garden+Furniture), General Merchandise (General Merchandise+Apparel & Accessories), and Business Investment (Agriculture, Forestry, & Fishing+Mining+Construction+Manufacturing+ Transportation+Communication+Electric & Gas+Wholesale Durable Goods+Wholesale Nondurables)
The Utah League of Cities and Towns will host this year’s Local Officials Day at the Sheraton Hotel and the Utah State Capitol on Wednesday January 26th. City officials and youth city council members from all over the state will have the opportunity to meet with state legislators and listen to special guest speaker David Walker, Comptroller General of the United States from 1998 until 2008.
Also, ULCT will distribute the newest edition of “The League’s Latest,” which includes a survey assessing the fiscal health of Utah’s cities and towns, a report from University of Utah and BYU professors on the demographic make-up and opinions of municipal elected officials in the state, and an economic forecast for the year based on taxable sales data and other factors.
Here is just a taste of some of the data included in ”The League’s Latest.” This graph shows the change in quarterly taxable sales from Q1 2006 to Q3 2009. Sales are divided into categories created by ULCT’s economic policy team which encompassed 75% of all taxable sales in 2009. They include: Tourism, Motor Vehicle Sales, Home Related, General Merchandise/Apparel, and Business investment.
CLICK FOR LARGER VERSION
It is difficult to compare July 2010 auto sales to July 2009. Last year auto sales where bumped up by the cash for clunkers program. However, comparing July 2010 to June 2010 shows some improvement with the auto industry. Compared to June sales Ford, GM, and Chrysler are all up 3 to 6%. Mr. Al Castignetti, sales chief for Nissan maybe sums it up best:
“There is a recovery. It’s just slower than anybody would like. For a long time people were sucking equity out of their house to buy cars and boats. That’s gone. The people who are out there buying cars are real serious about it.”
We will continue to track auto sales closely, it is a very important sector of taxable sales for Utah’s cities.