May 5, 2014 Local Option Sales Tax Distribution up 4.6%
Statewide, the April distribution for the 1% local sales tax was up 4.6% at $36.26 million (representing sales from February). The 4.6% gain was preceded by three months of anemic 0.2%, -1.1% and 0.1% changes. The 4.6% gain is close to our 4.5% forecast for the entire fiscal year 2014.
The state’s largest city, Salt Lake, registered a 2.5% decline in the April distribution. Sandy City gained only 1.3% and Draper was up only 1%. Meanwhile, distributions in the central and southwest Salt Lake Valley fared better: (Midvale, up 23.7%; South Jordan, up 13%; West Jordan, up 9.9%; and Murray, up 5.6%). West Valley’s distribution was up 7% in April.
Similarly, distributions in Ogden and Roy were up 6.5% and 7.3%, respectively. Provo’s was up 5.4% and Lehi’s was up 8.2%.
Distributions in South Davis County were soft like Salt Lake City’s (Bountiful, up 2.7%, Centerville, 0%). Farmington continued its 20% gains.
What was the cause, then, of the weakness over the past four months? New data (Department of Workforce Services) for the 4th quarter of 2013 revealed that average wages and salaries fell 1.1%, partially due to declines in the Mining and Federal Government (temporary shutdown) sectors. Residential construction new permit values were also down (-3%) in the 4th quarter along the Wasatch Front. In addition, statewide business investment was soft in the 4th quarter, particularly in Mining (-28%) and Wholesale Durable Goods (-5%), probably due to comparisons before the Rio Tinto landslide. Sales to information businesses sank 16% too in the 4th quarter.
We’re hoping we are back on track now following 4th quarter’s federal government scare and severe winter weather in other parts of the country, which also may have influenced Utah consumer confidence in November, December and January.