By Trip Jennings | The New Mexican
Posted: Sunday, July 10, 2011
This article is syndicated from The New Mexican. For a complete copy of the original article, click here.
It’s not quite time to cue up “Let the Good Times Roll,” Shirley and Lee’s 1950s R&B classic. But maybe the Beatles’ “Here Comes the Sun” will do the trick.
The number of building permits issued by the city of Santa Fe has increased in recent months, tempting local officials to wonder whether the local economy is rebounding.
Matthew O’Reilly, Santa Fe’s land-use director, wouldn’t go that far Thursday, but confirmed that city staff members handling building permits are busier than a year ago. Cautioning that they were preliminary numbers, O’Reilly predicted the number of city-issued building permits for the year that just ended June 30 would eclipse the previous year’s total by 36 percent.
“We’re seeing a lot of commercial permits, and that includes new construction and remodels. And we are seeing a lot of additions, remodels and alterations in residential construction,” O’Reilly said. “What we are not seeing is new home production building.”
John Di Janni, a local builder, can relate.
Di Janni, who has built custom homes in Santa Fe since 1977, finished his last home in 2008 after several years of juggling work on three to four new homes at a time.
“We haven’t built a house since then,” he said. “There are some people who are lucky to land a new house, but they are few and far between.”
Custom Homes by John Di Janni has survived on remodeling jobs and additions to existing homes since then. About a year ago, Di Janni noticed that the number of calls for such work began to increase, he said.
“People want to update their homes, new windows, new stuccos; rather than buying new, they are fixing up their houses, it seems to me,” he said.
Tax data appear to confirm the construction trend. Spending in the city of Santa Fe rose significantly in a year-to-year comparison between April 2010 and this past April, when the city reported $19 million in taxable receipts in the construction industry compared with $11 million in the previous year, according to information from the New Mexico Taxation and Revenue Department.
The gross-receipts tax is generally a good indicator of economic activity because it is a levy not only on the purchase of goods but also of services. And, generally, growth in taxable receipts usually means more revenue for the city. A clearer picture will emerge when numbers come in for the months of May and June, the last two months of the fiscal year.
Even though it was only a snapshot, tax data for the city of Santa Fe in April appear promising. Transactions in the city that were subject to the gross-receipts tax were $202 million, nudging past the $197 million reported in April 2010 and the $200 million recorded in April 2009. April is the latest month for which information was available.
Optimists might be tempted to point to a ongoing recovery, but the data aren’t so easily interpreted. Yes, local economic activity this April was slightly better in a year-to-year-comparison, but it is still well below matching pre-recession levels. The taxable portion of the gross-receipts tax in April 2008 was $222 million, well above this April’s figures.
There are other signs that the local economy hasn’t fully recovered.
Retail trade, Santa Fe’s major gross-receipts tax generator, appears to have stayed flat, if not dropped slightly, in recent years. Retail transactions subject to the tax dipped to $67.8 million this April, down from $68.8 million in April 2010. That compares unfavorably to the $73.5 million reported in April of 2008 and $68.2 million in April 2009.
The snapshot of the city’s economic activity seems to coincide with what’s happening in New Mexico overall.
According to a recent report by the Legislative Finance Committee, the Legislature’s budget arm, state tax revenues are greater than expected. Through April, the state received $87 million more than anticipated.
Receipts from the state’s corporate income tax showed big growth, coming in nearly 200 percent over last year’s levels, the report noted. But higher-than-anticipated rebates from the state’s film production tax credit program are expected to eat into that growth, the report said.
“An unexpected rush to receive film refunds before the new tax credit law takes effect in FY12 has pushed full-year credits to approximately $101 million compared to the forecast of $65 million,” according to the LFC. The rebates totaled $65.9 million in the state budget year that ended June 30, 2010.
The LFC’s report was issued July 1, the first day of the new state budget year. It was also the day the new law changing the state’s film production tax credit program took effect.