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The City Café

For those interested in sharing ideas and perspectives regarding local government.

Check out ULCT Economist Doug Macdonald’s economic forecast for FY 2016FY 2016 Forecast

DOUG MACDONALD

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.

June 15 Dist

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 MACDONALDMay 2015 1%The 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.

May 2015 Dist

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%.

Click here for ULCT Economist Doug Macdonald’s quarterly construction report for Salt Lake County and and the state.

Construction Graph

City Dist April 2015DOUG MACDONALD

April’s local 1% distribution came up on the Tax Commission website last week and at $35.98M was off 0.8% compared to a year earlier.  Even though the last two distributions were flat compared to last year, the 13.0% gain in February’s distribution pushed up the 3-month average to a 5.5% gain. For the fiscal year, the statewide distributions are up 5.6% compared to fiscal year 2014.

Nationwide, retailers sales were up 1.7% in February, with fairly strong auto sales.

Salt Lake City’s computed sales were up 10.1% in the April distribution, representing largely sales from February. Its distribution was up 4.7% for the month and up 5.8% for the fiscal year.  Sandy’s distribution was up 5.3%, implying a direct sales increase of 11.4% for February.  The distribution in Draper was up 16.4% in April, implying a 33.6% gain in sales.

In Davis County, Centerville’s distribution 7.6% gain led other cities. Layton and Farmington trailed Centerville with 3% gains.

In Weber County, Ogden and Roy’s distributions fell about 1%.

Lehi’s sales rose 17.6% in April, similar to Draper’s 16% gain, indicating strong growth is clustering there due to an influx of new businesses and homes.

Sales in St. George, Tooele and Moab rose between 5% and 8%.

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