Following last month’s 8.6% increase, the Tax Commission’s July 2015 distribution for the 1% local sales tax at $38.98 million was up 0.3% compared to a year earlier. This is consistent with what we talked about last month:
“ …it is possible that extraordinary inclusions of May transactions bolstered the June distribution; this would cut into next month’s distribution.”
A better gauge for the recent trend is the sum of the distributions for the last three months. which has increased 4.4%. In addition, total distributions for first 11 months of fiscal year 2014-15 are up 5.2%.
Nationwide, retail sales rose 2.7% in May, while new light-vehicle sales were up 6%. Disposable incomes were up 3.5% in May compared to a year earlier.
Distributions in Salt Lake County (up 1.2%) for July 2015 were mixed. On the plus side, Holladay’s distribution rose 13%, followed by South Jordan’s 4.1% and Salt Lake City and Draper’s 3.6%. Distributions in Midvale, West Valley and West Jordan were less than in July 2014.
Distributions in Davis County (up 2.3%) were a bit stronger. Farmington’s 9.3% gain was followed by a 6.2% increase in Kaysville and a 4% gain in Layton. Bountiful and Centerville posted lower distributions.
Lower distributions were also found in most of Utah and Weber counties.
Resort cities (Moab up 14.4%, and St. George up 5.7%) fared better than most cities along the Wasatch Front.
The economic indicators we look at are all green for the first time in many years.
Utah employment is growing almost 4% and average wages grew nearly 2% in the first quarter. Unemployment claims are down 10% and construction employment is up between 4% and 7% this year.
New construction is also improving, residential is up 9% in the last 3 months and commercial is up 70%.
Stimulating new car and truck sales is consumer sentiment, which was up to 96.1 in June. This is a long way from the low of 55 in 2009.
For the first 10 months of FY 2015, the 1% local sales tax was up 5.7% for all cities, 4.2% over the last quarter and up nearly 9% last month.
Compare the Stop Lights this month from those in 2009 for a big contrast.
Check out ULCT Economist Doug Macdonald’s economic forecast for FY 2016
The June distribution for the 1% local sales tax indicated that April taxable sales increased 8.6% compared to a year earlier. The Tax Commission distributed $41.61 million for June’s 1% local sales tax compared to $38.32 million last June.
This distribution surprised us on the upside, because lately the growth in the two distributions after the big, quarter-end distribution (e.g., February and May) has been muted. But June is the distribution month when the Tax Commission “trues-up” the hold-harmless cities to last-year’s distribution. This June they added about $1.98 million, compared to $2.71 million last year. This effectively bumped up the distributions to non-hold-harmless cities by about $720,000 (or 2%). This may have bumped up non-hold-harmless cities, but probably didn’t effect the overall 8.6% gain. So, it is possible that extraordinary inclusions of May transactions bolstered the June distribution; this would cut into next month’s distribution.
Nationwide, real retail and food services sales increased 1.6% in April and 2.6% in May 2015.
In Utah, the 8.6% gain for June’s distribution brought up the 3-month average gain from 2% last month to 4.3%. Fiscal year 2015 year-to-date growth statewide is now up to 5.7% (from 5.4% last month) based on the first 10 months.
In Salt Lake County, double-digit gains occurred in six of the nine cities we tally. Holladay’s distribution rose 23.3% and Draper’s distribution was up 20.4% compared to a year earlier. Salt Lake City’s distribution of $3.99 million was up 14.4%, bringing their year-to-date gain up to 6.3%. The loss of several auto dealers to other cities flattened Sandy’s distribution.
In other counties, double-digit gains were the rule, either indicating very strong sales or the effect from the lower “true-up” to hold-harmless cities this year.
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DOUG MACDONALDThe Tax Commission distributed $48.98 million in the last week of May, the second highest distribution in the past nine years. The May distribution represents March taxable retail sales, services and business purchases, but also includes returns from first quarter filers. The $48.98 million was a welcome 4.4% increase from last May’s $46.92 million. The last two months’ percentage change was only 1.7% and -0.8%. We are now hearing that the prior two months included large refund amounts that may continue to affect sales in the coming months.
In the coming months, expect continued gains of 4% to 6%, due to continuing job growth, high consumer sentiment, lower gas prices and expanding new home building. Any further large refunds may mute those gains, however. It also appears that the third month of the quarter has been seasonally stronger than the first two months, at least for the past three quarters.
In Salt Lake County, South Jordan, Draper, West Valley and the two Jordans saw gains greater than 5%. Salt Lake City saw a 3.5% increase, but is still up 5.5% fiscal year-to-date (last nine months).
In Utah County, Lehi’s sales increased 25.5% and its distribution rose almost 15%. Orem’s distribution was up 5.5%, but Provo was flat compared to a year earlier.
Most of Davis County’s large cities did at least as well as the state average. Bountiful’s distribution was up almost 9% and Layton’s was up 5.6%. Farmington’s sales were up 21% and its distribution was up almost 13%.
Ogden and Roy distributions were up close to the state average.
The resort cities of Moab and Park City both saw sales gains approaching 20%.