Sagging construction market and auto sales hurt tax collections

Sales tax collections were down sharply in western Nevada for November, a combination of reduced construction and lower auto sales than the same month a year ago.

Carson City's taxable sales fell 12.9 percent and Douglas's by 9.2 percent. Even rapidly growing Lyon County was down by 20.8 percent for the month.

Carson City Finance Director Sue Johnson said much of the decrease can be attributed to slumping real estate sales and contractors holding off on new construction. Where homes were often sold within a week of going on the market a year ago, it may now require a couple of price cuts and several months.

And because of that, some builders are delaying construction of new projects.

She said categories from specialty trade contractors to wholesale markets, furniture and building material sales were all down sharply, the latter by nearly 24 percent in the capital city compared to the same month of 2005.

The same was true in Douglas County where taxable sales of building materials fell nearly 20 percent. Lyon County was hit even harder with building materials sales off 55.6 percent in November.

For auto sales, the story was similar but for a different reason. Major foreign-car dealers say their sales have been good this fiscal year.

But domestic dealerships were apparently down from banner year sales in 2004 and 2005. Those numbers were boosted sharply by dealer incentives offered by Ford, Chevrolet and Chrysler. This year, the rebates and price incentives are all but gone and interest rates are up.

Dana Whaley, who manages Carson City's Toyota dealership, said domestic dealership sales were pumped up by those incentives which attracted many people who might not have otherwise bought cars in 2005. The result: This year's domestic car sales might not be bad; they may just appear bad in comparison to the previous year.

Bret Kimball, of Michael Hohl Honda-Subaru, made a similar analysis, but added that high fuel prices are also pushing more people toward generally smaller, more efficient foreign models.

And Johnson said one factor may simply be that so many people bought new vehicles in 2004 and 2005 that there just aren't that many people who need a new car this year.

In addition to Carson, Douglas and Lyon, Washoe, Churchill, Humboldt and White Pine counties were down compared to the previous November.

Storey County, however, was the dramatic exception in November, reporting a 698 percent increase in taxable sales to $80.2 million. That, according to Taxation Department officials, was the result of Sierra Pacific Power Co. reporting the purchase of generating equipment for the new electric generating plant east of Reno at Tracy.

Total collections in Carson, Douglas and Lyon are also down for the first five months of this fiscal year by 4 percent, 9.6 percent and 13.7 percent respectively. The fiscal year began July 1.

Carson City also reported declines in sales by general retail and clothing stores. Johnson said she is concerned the capital city may be losing business to the new Summit Sierra shopping center in south Reno at Mount Rose Highway.

Statewide, November's taxable sales were up just 1.9 percent, one-tenth of a percent in Clark County.

Total taxable sales statewide were $3.89 billion. Coincidentally, that is $73 million more than a year ago which is just about the amount Storey County's taxable sales increased.

With sales tax growth statewide just 3.5 percent thus far this fiscal year, the state general fund portion of sales tax collections is running 1.42 percent and $14.5 million behind the amount projected by the Economic Forum and used to build the state budget for this year.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.

County Taxable Sales Change from 11/05

Statewide $3.891 billion 1.9%

Carson City $72.64 million -12.9%

Churchill $23.6 million -3%

Douglas $55.8 million -9.2%

Lyon $26.7 million -20.8%

Storey $80.3 million 698%

Washoe $550.3 million -3.8%

Clark County $2.81 billion 0.1%