Last year’s sales tax collections in Wellington (Colorado) set an all-time record at $617,737.

While that is good news during a nationwide economic downturn, it does not offset the decline in use taxes a growing community generally collects from construction activity.

Wellington had its heyday for use taxes on building materials in 2004. That was the year the town issued 296 residential building permits and collected more than $707,000 in taxes on residential, commercial and remodel permits. In comparison, Wellington issued 13 new home building permits and one commercial permit in 2009 and collected $58,441 in use taxes.

The 2009 sales taxes are up 1.78 percent from 2008 collections of $606,950. Compared with 2004, the boom year for construction, 2009 sales tax collection increased 113 percent.

“The rate of increase in sales tax is slowing, but it’s still increasing,” noted Wellington finance director Mike Cummins.

Wellington town leaders like to estimate revenues conservatively, so a year ago they predicted sales tax income would hit $575,000. The nearly $43,000 of additional revenue goes into the town’s fund balances for future budgets.

Sales tax in Wellington is 3 percent. Of that, 2 percent, about $412,000, goes into the general fund and 1 percent is dedicated to the street and drainage funds.

Last year, sales taxes made up 32 percent of general fund revenue. The general fund supports local government activities such as law enforcement, libraries, recreation, building maintenance, sanitation and community events.

There is a two-month lag between the time sales taxes are collected by local merchants and the time Wellington receives them from the Colorado Department of Revenue. That means 2009 revenue represents sales that occurred from November 2008 through October 2009.

Looking into 2010, Wellington received $45,758 in sales taxes in January (November 2009 sales). The number is slightly lower than the revenue received a year ago in January. Should the lower trend continue throughout the year, Wellington will have to pull back on spending when it puts together its 2011 budget.