Golden's boosted 2021 sales tax hints at pandemic recovery

City enjoys 30% more sales tax than in 2020

Paul Albani-Burgio
palbaniburgio@coloradocommunitymedia.com
Posted 9/22/21

Although the COVID-19 pandemic continues, its negative impacts on Golden’s overall economic picture seem to have become an increasingly distant memory. According to city data, the city saw five of …

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Golden's boosted 2021 sales tax hints at pandemic recovery

City enjoys 30% more sales tax than in 2020

Posted

Although the COVID-19 pandemic continues, its negative impacts on Golden’s overall economic picture seem to have become an increasingly distant memory.

According to city data, the city saw five of its highest non-December months for sales tax collections since at least the start of 2018 in March, April, May, June and July of this year. Data for August is not yet available.

According to the city data, sales tax collections reached a non-December high of $1,992,024 in June 2021. That was up about $372,000 from the same month in 2020 and about $307,000 from the same month in 2019.

Collections dipped some in July from June to $1,714,080. However, that was still up about $400,000 from the same month in 2020 and almost $200,000 from July 2019.

Jeff Hansen, the city’s Finance Director, told Golden’s Citizens Budget Advisory Committee that the July numbers were like “deja vu all over again” with the city saw another strong month of sales tax numbers as many enthusiastically returned to summer travel and other activities after hunkering down at the height of the pandemic.

“Summer tourism season went incredibly well, people are still spending money and shopping online, they are going to Golden Mill,” said Hansen. “Right now, on the sales tax side life is good and we will keep riding this horse as long as we can.”

In a sales tax report sent to Golden’s city council on Sept. 7, Hansen explained that online retailers such as Amazon, Ebay and Walmart.com and food delivery services like GrubHub and Doordash have been driving a large portion of the recent increase.

In July of 2020, the Golden City Council passed a law requiring online retailers to collect Golden sales tax. Previously, doing so had been optional although many large retailers such as Amazon did collect the tax.

However, the memo states that local retailers are also seeing an “overall rebound from last year as people are getting out and spending money.” Home Depot, Kohl’s, Duluth Trading Company and Bent Gate’s collections are also up from last year, while restaurants have surpassed 2019 collection levels with the Golden Mill showing particularly positive results, according to the memo.

When one member of the Citizens Budget Advisory Committee remarked that they were surprised the tax collections had surpassed not only 2020 levels but 2019 levels, Hansen said that increases in sales tax collections are generally expected due to inflation, population growth and other factors. However, the dramatic nature of the increase is likely attributable to pent up demand resulting from the pandemic, he said.

“Inflation is going to cause prices to go up,” Hansen said. “And one thing the pandemic has caused is increased prices in various areas, a lot of restaurants upped their prices to try and recoup their losses so sales tax on increased prices means more sales tax.”

When another member of the advisory committee questioned whether Hansen thought the staffing shortages plaguing many businesses could have an impact on sales tax collections, Hansen said it was too early to say.

“Some of this we just have to wait and see because my crystal ball is not real clear,” he said.

However, Hansen said he believed that the end of the extended unemployment benefits at the start of Sept. will likely make hiring easier as more businesses seek work.

Also included in the report was a chart comparing the city’s sales tax collections by month for the past three years.

That chart shows that the biggest drops relative to 2019 happened in the first few months of the pandemic with collections starting to recover in the summer and even surpassing the 2020 numbers in October. Overall, 2020 sales tax collections were down about 13% from 2019. However through July, 2021 collections were up about 30.8% from the 2020 numbers.

However, the memo noted that one factor that could become a bigger concern when it comes to sales tax going forward is the spread of the delta variant, which has led some to be more cautious about going out. But as of July, the variant did not appear to be having a large impact.

“While there is still some concern as to the impact of the Delta variant, it doesn’t seem to be slowing down the business activity downtown and throughout the city,” Hansen wrote in the memo.

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