Coronavirus Squashes Colorado Sales Tax Revenue
By Chris Stiffler, senior economist
In late March, stay-at-home orders issued by Gov. Polis in response to the coronavirus pandemic caused a sudden halt to the tourism, travel, food service and accommodations industries. The Colorado Department of Revenue recently released their sales tax collections data for April 2020 (the first month of stay-at-home orders) and total net taxable sales for April were 81 percent of what they were the same month a year prior.
Because Colorado generates much more of its tax revenue from sales tax compared to other states, stay-at-home orders have a huge effect on state and local government budgets. Colorado has the third-highest average local sales tax rates behind Alabama and Louisiana. On average, U.S. states generate about 5 percent of total state and local tax revenue from sales tax. In Colorado that figure is 15 percent. That means local sales taxes are usually the largest revenue source for the General Funds of Colorado cities.
Accommodations, clothing stores, arts/entertainment/recreation, and food service have been hit the hardest. Hotels and other accommodations businesses had the biggest hit from the virus, taking in only 11 percent of the taxable sales in April 2020 as they did in April 2019.
| Taxable Sales By Industry in Colorado April 2019 vs April 2020 | |||
| Industry | 2019 April | 2020 April | Ratio |
| (2020 April/2019 April) | |||
| Accommodation | $319,664,000 | $35,216,000 | 0.11 |
| Clothing and Clothing Accessories Stores | $289,754,000 | $88,738,000 | 0.31 |
| Arts, Entertainment, and Recreation | $41,900,000 | $13,866,000 | 0.33 |
| Food Services and Drinking Places | $1,074,873,000 | $499,813,000 | 0.46 |
| Educational Services | $5,117,000 | $2,747,000 | 0.54 |
| Health Care and Social Assistance | $10,962,000 | $5,968,000 | 0.54 |
| Sporting Goods, Hobby, Musical Instrument, and Book Stores | $168,560,000 | $104,342,000 | 0.62 |
| Furniture and Home Furnishings Stores | $196,574,000 | $125,994,000 | 0.64 |
| Motor Vehicle and Parts Dealers | $1,125,074,000 | $767,959,000 | 0.68 |
| Real Estate and Rental and Leasing | $328,318,000 | $234,860,000 | 0.72 |
| Management of Companies and Enterprises | $195,924,000 | $140,559,000 | 0.72 |
| Information | $295,944,000 | $220,682,000 | 0.75 |
| Construction | $189,143,000 | $148,473,000 | 0.78 |
| Electronics and Appliance Stores | $160,832,000 | $127,915,000 | 0.8 |
| Finance and Insurance | $54,031,000 | $43,810,000 | 0.81 |
| Miscellaneous Store Retailers | $306,915,000 | $250,351,000 | 0.82 |
| Mining, Quarrying, and Oil and Gas Extraction | $119,736,000 | $99,433,000 | 0.83 |
| Utilities | $214,211,000 | $178,579,000 | 0.83 |
| Manufacturing | $454,264,000 | $379,515,000 | 0.84 |
| Public Administration | $7,814,000 | $6,605,000 | 0.85 |
| Wholesale Trade | $613,919,000 | $521,716,000 | 0.85 |
| Health and Personal Care Stores | $134,797,000 | $119,225,000 | 0.88 |
| Gasoline Stations | $79,133,000 | $72,292,000 | 0.91 |
| Administrative and Support and Waste Management | $40,098,000 | $37,072,000 | 0.92 |
| General Merchandise Stores | $658,003,000 | $622,582,000 | 0.95 |
| Food and Beverage Stores | $487,694,000 | $499,199,000 | 1.02 |
| Agriculture, Forestry, Fishing and Hunting | $8,800,000 | $9,245,000 | 1.05 |
| Building Material and Garden Equipment and Supplies Dealers | $603,305,000 | $691,712,000 | 1.15 |
| Professional, Scientific, and Technical Services | $123,268,000 | $156,739,000 | 1.27 |
| Transportation and Warehousing | $25,078,000 | $33,976,000 | 1.35 |
| Nonstore Retailers | $245,830,000 | $717,022,000 | 2.92 |
| TOTAL | $8,579,534,000 | $6,956,204,000 | 0.81 |
| Source: Colorado Department of Revenue Taxable Sales by Industry | |||
Regionally, Boulder’s retail sales in the entertainment/accommodation/food service industry in April 2020 were only 28 percent of what they were in 2019. Denver is even lower at only 25 percent.
| Tourism, Entertainment, and Restaurant Retails Sales Way Down | |||
| April 2019* | April 2020* | Ratio | |
| 2020 April/2019 April | |||
| Arvada | $28,076,000 | $16,129,000 | 0.57 |
| Aurora | $99,477,000 | $57,168,000 | 0.57 |
| Boulder | $56,774,000 | $16,110,000 | 0.28 |
| Centennial | $28,183,000 | $11,869,000 | 0.42 |
| Colorado Springs | $161,304,000 | $70,768,000 | 0.44 |
| Denver | $417,381,000 | $104,769,000 | 0.25 |
| Fort Collins | $55,222,000 | $23,297,000 | 0.42 |
| Greeley | $28,680,000 | $16,601,000 | 0.58 |
| Lakewood | $51,661,000 | $24,527,000 | 0.47 |
| Longmont | $22,740,000 | $12,070,000 | 0.53 |
| Pueblo | $32,814,000 | $20,717,000 | 0.63 |
| Thornton | $26,697,000 | $17,701,000 | 0.66 |
| Westminster | $41,574,000 | $19,093,000 | 0.46 |
| Source: Colorado Department of Revenue Retail Sales in Major Cities by Industry | |||
| * Retail sales in the following industries: Art, entertainment, recreation, | |||
| gas, accommodations, food service and drinking places | |||
Tourist towns and ski towns were also some of the hardest hit areas of the state. In Copper Mountain, with the ski resort closed in April 2020, hardly any retail sales occurred. Copper Mountain collected 7 percent of the sales tax in April 2020 than it did in April 2019. The cities of Vail, Winter Park, Keystone, Breckenridge, Black Hawk, and Aspen top the list of cities who saw the biggest year-over-year drop in sales tax collections from April 2020 to April 2019.
| Sales Tax Collections Sink in Tourist Towns | |
| Ratio* | |
| (2020 April Net Taxable Sales/2019 April Net Taxable Sales) | |
| Copper Mountain | 0.07 |
| Vail | 0.26 |
| Winter Park | 0.26 |
| Keystone | 0.32 |
| Breckenridge | 0.33 |
| Black Hawk | 0.35 |
| Aspen | 0.43 |
| New Castle | 0.43 |
| Lone Tree | 0.47 |
| Nunn | 0.48 |
| Estes Park | 0.49 |
| Snowmass Village | 0.52 |
| Mountain Village | 0.55 |
| Manitou Springs | 0.57 |
| Frisco | 0.57 |
| Greenwood Village | 0.58 |
| Fort Lupton | 0.6 |
| Glendale | 0.63 |
| Minturn | 0.63 |
| Poncha Springs | 0.64 |
| Dillon | 0.64 |
| Boulder | 0.64 |
| Denver | 0.64 |
| Idalia | 0.65 |
| Idaho Springs | 0.65 |
| Silverthorne | 0.66 |
| Glenwood Springs | 0.66 |
| Mt. Crested Butte | 0.67 |
| Hayden | 0.69 |
| La Salle | 0.71 |
| Red Cliff | 0.73 |
| Telluride | 0.75 |
| Durango | 0.75 |
| Westminster | 0.75 |
| Ouray | 0.75 |
| Louisville | 0.76 |
| Rifle | 0.77 |
| Georgetown | 0.77 |
| Avon | 0.77 |
| Grand Junction | 0.77 |
| Loveland | 0.78 |
| Fort Collins | 0.78 |
| Trinidad | 0.79 |
| Granby | 0.79 |
| Walden | 0.79 |
| Saguache | 0.8 |
| Broomfield | 0.81 |
| Del Norte | 0.81 |
| Colorado State Total | 0.81 |
| Source: Colorado Department of Revenue State Sales Tax Return Data by City | |
| *ratio of state net taxable sales in April 2020 compared to April 2019 | |
It’s important to keep in mind that these data are only for April, and while the state did begin to loosen restrictions on travel and business operations beginning in May, the bounce won’t be nearly enough to make up for the lost revenue. Cities and counties will be hard-pressed to do much of anything other than cut their budgets next year to make up the difference, and long-term national projections don’t indicate a full economic recovery any time soon.
With virus cases on the uptick over the past few weeks, it’s possible more restrictions could be on the horizon, which could worsen an already tough situation for Coloradans. Cuts to local government budgets aren’t just numbers on paper – they mean a reduction in the services that families, businesses, and their communities count on.
