Weekly grocery trips, nights out on the town and that occasional splurge will become a bit more expensive come July 1 when the city of Durango imposes its voter-approved half-cent sales tax increase.
Durango sales tax will increase 0.5%, from 3% to 3.5% – or 7.9% to 8.4% when including county and state sales taxes – on July 1. It is the beginning of a 10-year levy intended to raise no more than $4.69 million a year to pay for the “construction, operation and maintenance of streets, alleys, curbs, gutters, sidewalks and related street improvements,” according to the approved ballot language.
A half-cent sales tax increase will add one penny of tax to every $2 spent within city limits. A $100 purchase with a 7.9% sales tax is $107.90. With the sales tax increase, the same purchase will be 50 cents more, bringing the total cost to $108.40.
Ballot measure 1A passed by a slim margin, with only 195 votes separating the 4,415 votes cast. By comparison, a 2015 reauthorization of a half-cent of a 1-cent sales tax to be used to construct, operate and maintain parks, open space and trails passed with about 70% approval.
A range of reactionsMonique DiGiorgio, managing director with Local First, said the half-cent increase will affect certain businesses and customers differently.
Businesses with low-cost products or services may not be as impacted as those with big-ticket items, DiGiorgio said. Locals may see the tax increase on grocery bills or at the gas pump if they’re looking for it, but it’s unlikely tourists will even notice, she said.
Local First hopes to avoid locals shopping for big-ticket items online or out of town. Farmington has a 8.25% sales tax, Pagosa Springs is at 6.9% and Albuquerque is at 7.875%.
“In addition to looking at who is shopping, it’s important to look at what they are buying,” DiGiorgio said. “Something like groceries, do we think people are going to drive to Farmington or Aztec to buy groceries?”
Greg Rowland, general manager at Morehart Murphy Auto, said the half-cent sales tax will affect some of his customers, but the extra $200 on a $40,000 vehicle may not be what deters people from buying vehicles in Durango.
“I think any time you’re talking about taxes, it’s certainly a concern for anybody purchasing, especially big purchase items,” Rowland said. “In the grand scheme of things, it’s probably not as bad as if it had been a 2% increase. That would have been a different story.”
But for Joe Vagneur, owner of Supernova Furniture and Sleep Gallery, the sales tax will “definitely have an impact,” he said. The furniture industry has already been hit hard by trade restrictions imposed on China – his costs have gone up 25% because of it – and the sales tax increase will only raise the price for consumers, he said.
A half cent on the dollar may not seem like a lot, but for Vagneur, who’s already struggling to keep his prices competitive, the extra $20 on a $4,000 purchase may be the proverbial straw that breaks the camel’s back.
While Vagneur said Supernova will “weather this storm better than some,” increasing the cost of high-ticket items will likely drive buyers to places where taxes are less of a burden for the consumer.
“I don’t necessarily feel good about sales tax in any way, shape or form,” Vagneur said. “We’re going to have to raise our cost to the end consumer. The folks here in Durango are going to be less inclined to shop local.”
Marcos Wisner, co-owner of 11th Street Station and former City Council candidate, said he plans to absorb the sales tax increase into his business model as a gesture of good faith, recognizing how important the roads are to his business.
Without properly maintained streets, the nearly two dozen trucks that bring food or alcohol to 11th Street Station may not arrive as scheduled, Wisner said. And poor road conditions could damage his employees’ vehicles or keep people from coming to Durango at all, he said.
“Prices naturally have to go up, there’s all sorts of things that affect our business and the need for a price increase – the sales tax doesn’t have anything to do with that,” Wisner said. “There’s things that affect us a lot more: labor, transportation, cost of goods, sewer, water.”
Kelli McGannon, a Denver-based spokeswoman for City Market, said the grocer doesn’t have plans to change operations at either of its Durango locations in response to the sales tax increase. The company will continue to help reduce prices for customers through online coupons or sourcing locally produced goods, but it’s no different than what City Market does already, McGannon said.
“Even if you spend $800 a month, it’s $4,” McGannon said. “People have budgets, and they have to stick to them. We’ll be consistent to help people save on their grocery bills.”
firstname.lastname@example.orgThis story has been updated to include the specific amount of the city of Durango’s sales tax, which is 3% going to 3.5%.