Sales Tax Woes In Denver

The Denver Post

Denver officials scrambling to close a projected $70 million budget deficit are considering moves such as creating a fee for trash collection, releasing nonviolent offenders from jail and delaying street repairs.

But a review of sales-tax revenue collected in the first four months of this year shows matters may get even worse.

"We'd have to improve our revenue significantly to keep on pace," said Stephanie Adams, the manager of performance initiatives in the city's budget and management office. "It's very likely we'll have to revise our revenue projections downward again."

The current projected $70 million budget gap covers the next 18 months and is based on a scenario that sees the city collecting 6 percent less in sales-tax revenue this year than it did last year.

The deficit figure also anticipates sales-tax collections stabilizing next year and remaining roughly even with what the city anticipates it will collect this year.

Through the first four months of this year, sales-tax collections actually generated 13 percent less in revenue than they did last year.

That means the pace of consumer spending in the city would have to roughly quadruple through the rest of this year or increase next year instead of remaining flat to meet the current projections.

And the trend so far has not been encouraging.

Sales-tax collections have declined further than expected each month this year, leaving the city on pace to collect the same amount from the sales tax as it did four years ago.