August 26, 2013 Sales tax distribution down for first time in 20 months
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.