The Tax Commission distributed $50.45 million in local 1% sales taxes today, up 5.8% from the same month last year. The August distribution represents sales from June and includes second quarter returns from smaller accounts.
The August distribution is also the final month for fiscal year 2015. At $518 million statewide, fiscal year 2015’s 1% local sales tax distributions were up 5.3% compared to FY2014’s 4.0% increase. Our forecast in December 2013 called for a 3.7% gain.
June’s 5.8% gain was strong relative to the nationwide increase in retail trade sales of 1.8%.
The largest city in the state, Salt Lake City, saw its distribution rise 1.3% in August. Since its population impact was -0.8% and the state’s overall gain was 5.8%, we compute its direct sales were down 1.7% in August. Its three month average distribution was up 5.8% and its fiscal year-to-date gain was 5.6%.
17% distribution gains were recorded in South Jordan and Lehi in August. Midvale (12%), Holladay (10.6%) and Centerville (12.7%) recorded gains in the low teens.
Surprisingly, Moab posted a near 9% distribution decrease from last year.
We were unaware that July’s distribution included new population numbers from the Bureau of the Census to the Tax Commission.
Because these new numbers impact the “computed direct sales”, I revised July’s distribution report.
In most cases, this doesn’t affect computed direct sales much, except for Holladay, South Jordan and Lehi, whose population changes were pretty big in 2015. Holladay’s population increased 13.4% in 2015. Subtracting the state’s population increase of 1.45% and then multiplying by 50% (due to the formula), its population impact will be an additional 6% each month in FY2016.
I am also including a spreadsheet with the new population numbers for July 2015 and the monthly impact on your distributions.
There probably should be another calculation backing out the hold-harmless cities, so these are approximate.
Nevertheless, I hope that this will be useful to you as you watch FY2016 distributions unfold.
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.