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The City Café

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

Category Archives: Clusters

January’s distribution of the local option sales tax actually isn’t quite as bad as we initially thought. After carefully reviewing the numbers last week cities are only down 12% versus the initially thought 16%. Here are a couple of details from January’s numbers (November sales).

  • Total sales tax revenue (local option) — $28.5 million
    • January 2009 = $32.4 million
    • January 2008 = $35.1 million
    • January 2007 = $34.6 million (not adjusted)
  • Over the last three months the local option sales tax is down $11 million from last year (or 10.2%)

Sales tax for municipalities in the aggregate is down 12% this past month, but we certainly know that each city and town is different.  Each city relies on a slightly different economic makeup, meaning the recent economic downturn has impacted some communities more. The ULCT has clustered all 245 cities into twelve groupings to better understand this effect. Below is a chart of the sales tax distribution for each cluster type of community. This past month was especially hard on many communities in the Utah basin (communities with an economy reliant on mining or natural resources), where January’s distribution is actually down 30% from the previous year.

I’ve been working on an interesting project the past few weeks, clustering of Utah’s cities and towns. Often our analysis here at ULCT requires grouping or clustering of cities. But usually this grouping is dictated solely by population size or regional location–very surface and misleading variables. In an attempt to find a more accurate grouping, ULCT has attempted clustered cities together based on demographic, financial, and economic characteristics. The variables used to group cities are:

  • 2005 population
  • Percent population change 2000-2005
  • Household median income (2000 Census data)
  • 2003 Primary residential land value (& per capita)
  • 2003 Commercial and industrial land value (& per capita)
  • 2003 Property tax revenue (& per capita)
  • 2003 Sales tax revenue (& per capita)

Our results led to 11 clusters of cities, with Salt Lake City as the one outlier. The eleven types of clusters are: major cities, commercial centers, high growth communities, residential transitioning, high income residential, urban edge, resort communities, natural resource/mining based, old established, traditional agricultural, and small towns.

If you are interested in where your city grouped or would like to see the analysis write-up please review the report: 2007 ULCT Cluster Analysis I’m interested in hearing your feedback on this project. I think we will find it a great tool enabling better policy analysis. Please contact me with any questions.

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