City officials say business is picking up

By Zsombor Peter
Staff Writer

GALLUP — The city may not be known for its explosive growth, but anyone who thinks the local economy as a whole is still struggling hasn't been paying attention to the city's gross receipts and sales figures lately.

"There's been a sense that business has not been doing well," said Assistant City Manager Larry Binkley, who watches over the city's budget.

It's a perception that does not match up with the city's latest figures. According to its most recent report, the city's total retail sales reached nearly $234 million in March nine months into the current fiscal year an "unusual" 7.4 percent increase over this time last year. And even though more than $32 million in sales made February when the state finally reports business from the holiday shopping season a record month, this year's gains haven't come suddenly. Except for October, a typically turbulent month for reporting, retail sales have been higher this fiscal year than in 2004 and 2005 for every month.

It's a welcome change from the relatively flat budgets of recent years past, said Binkely.

As the largest contributor to the city's tax base, retail sales have also helped drive taxable gross receipts up to $464.7 million so far this year, 3.9 percent above this time last year. And with its 2.8 percent take on those receipts, the city is sitting on a half-million dollar windfall in gross receipts tax revenue.

Another bit of good news comes by way of the lodgers tax, the city's take on local hotel and motel stays. According to the city's latest report, it's up nearly $60,000 roughly 10 percent compared to last year, when it took a slight dip.

This year's good news has encouraged staff to project a record take in lodgers tax for 2007, some $958,000. The city will use the money as it does every year on local events and groups that promise to attract visitors who'll shop in Gallup's stores, eat at its restaurants and stay in its hotels, replenishing it hopes the very pot its spending from.

Local groups have already begun making bids for the popular allocations. The City Council will have to make its decisions by June, in time to prepare its 2007 budget.

If all this good news is unusual, the bad news is nothing new. For at least the third straight year, gasoline tax revenues and therefore sales are down. It's dipped more than $51,000 or eight percent compared to this time last year, and $174,000 compared to 2003.

What is unusual about the gas tax, Binkley said, is that it's stopped moving in the same direction as lodgers tax, which it's typically been linked to.

"The correlation between gas tax going up and lodgers tax going up and gas tax going down and lodgers tax going down is not there any more," he said.

Binkley isn't sure why that is, but has an idea: While tourist traffic off of Interstate 40 continues providing the coveted "heads in beds" that feed the lodgers tax county residents are making fewer shopping trips into the city, saving on gas.

The gas tax feeds the city's streets department budget. Less tax, Binkley said, could mean cutting the department's budget, and, in effect, its services.

"That's our least favorite option," he said.

Other options, the assistant city manager said, include supplementing the department with the city's general fund or its infrastructure budget. Both moves would still mean spending less on other projects.