Sales-tax revenues surging in Utah

In-migration, children of baby boomers and higher spending habits are increasing the sales tax revenues in many Utah cities.

"There are a lot more people here than we thought," said Doug Macdonald, chief economist for the Utah State Tax Commission. "You have Southern Californians and all kinds of retirees coming in."

Also, add to the economy the dollars contributed by the children of baby boomers, known as "echo" baby boomers, and city leaders have a positive outlook on their local economies.

Those factors affect the significant percentage change in forecast sales tax reports. Projected sales tax distributions for 2007 indicate 24 Utah cities will have an increased local sales tax, according to the annual sales tax distribution report released by the State Tax Commission.

And it comes as no surprise to the report's top-ranking cities.

"Gross taxable sales have been running 20 percent to 25 percent for the past few years," said Workforce Services regional economist Lecia Parks Langston, who works in St. George. "Part of it is population-driven, and we've also reached the critical mass size that attracts all these big-box stores. Retail certainly has been very, very strong."

St. George is the nation's second-fastest-growing metropolitan area, the Census Bureau says. The southern Utah hot spot had the highest percentage change in sales-tax distribution, with a 19 percent increase forecast for 2007. Vernal came in second with a 13.3 percent change, and Cedar City third with a 13.1 percent change.

Washington County Economic Development Director Scott Hirschi agreed with Langston, saying there was "nothing earth-shattering" about the report.

"It's not big news. It's what we've seen for the last three years," said Hirschi, who said that the county's 9 percent growth rate, coupled with inflationary pressures, is the leading cause of the increase in local sales tax revenues.

Park City, fifth in the report with an 11.4 percent growth, is also seeing sales tax percentages soar to record numbers.

"I would say 90 percent of the reason is for increased destination tourists," said Colin Hilton, economic and capital development director for the city. "Yes, we are experiencing rapid growth and a crazy real estate market, but still 73 percent of city revenues comes from tourists.

"Our big observation is our winter months. Each of the last two years have increased by double digits."

However, for the scenic mountain town, the jump in tax revenue comes with its costs.

"Given these numbers, a lot of our focus now is on dealing with complex transportation and parking issues," Hilton said.