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Kennecott slide causes drop in sales tax revenue

Published September 11, 2013 7:07 pm

Revenues • Salt Lake County's sales-tax collections down by 3.4 percent in June.
This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

It's not the only factor, but the shutdown of Kennecott's Bingham Canyon Mine after a massive April landslide is beginning to impact sales-tax revenues in Salt Lake County.

Overall sales tax collections in June were 3.4 percent below the same month a year earlier — a decline of about $444,000 — the County Council learned Tuesday during a presentation by county financial officer Lance Brown.

"Kennecott is a significant factor in the slide," he said, referring to the copper giant's drastic production reduction and the job losses that followed an April 10 slide that took out the pit's northeast flank and left 165 million tons of waste rock in its bottom.

The mining company purchases all sorts of goods and services, Brown had warned the council just after the slide, predicting a drop as Kennecott focused on reclamation rather than production.

Because Kennecott's operations are largely in unincorporated Salt Lake County, the impact was most pronounced on the county's 1 percent local option tax, which is imposed on sales in unincorporated areas. Local option tax collections in June were 7.2 percent below that month in 2012.

Kennecott's troubles are not solely responsible for the dip, Brown noted. In five of the past six months, local option sales tax collections have been down from the previous year, indicating the economic recovery is lagging after a more-robust bounceback in 2012.

"The trend is a little bit of a concern," Brown said.

Last month's decline also can be attributed in part to an anomaly — the State Tax Commission distributed revenues several days earlier this year than last, so some income is missing from the June 2013 bottom line, Brown said.

All in all, overall sales tax collections in 2013's first six months were 1.4 percent, or $930,000, below the amount projected for that time frame in the 2013 budget. Still, the half-year total of $67 million remains $1.3 million ahead of the collection pace for the first six months of 2012.

In fact, Brown noted that the quarter-cent county option sales tax, which is imposed on sales throughout the county, has rebounded since the Great Recession. For the 12-month period that ended June 30, that tax generated almost $48.4 million for the county. That is almost up to the pre-recession 12-month high of $48.5 million.

"We've come a long way back but there's still a ways to go," he said, calculating that with adjustments for inflation since that high was reached in 2006-07, county option tax collections should be up to $55 million by now.

"If we continue to have anemic growth — and so far that has been the nature of this recovery — it may be a long time catching up," Brown said.

mikeg@sltrib.com

Twitter: @sltribmikeg