Pandemic impact: DC’s sales tax revenue now $500M less than originally forecast

The pandemic shut down parts of downtown D.C. during the spring. The effect is being felt in sales tax revenue. (Photo by Eric BARADAT / AFP) (Photo by ERIC BARADAT/AFP via Getty Images)

The hospitality industry accounts for 50% of the District’s sales tax revenue, and the coronavirus pandemic’s impact on hotels, restaurants, bars and other hospitality-related industries has been significant for D.C.

The District Office of the Chief Financial Officer reports hotel tax collections in August were about 10% of their prior year level, and restaurant tax collections were down 33% from last August.

Those numbers derailed the fiscal 2020 revenue forecast, although it was expected.

The Office of Revenue Analysis originally estimated sales tax revenue for fiscal 2020 would be $1.7 billion, 6.6% over a strong fiscal 2019. In February, that forecast was reduced only modestly, but the city now expects 2020 sales tax collections will be $1.2 billion, $500 million less than the original forecast.

In August, the number of room-days sold at hotels in D.C. was down 80.1% from a year ago, and room rates were down 15.2%.

Food services employment was 39.6% less than in August 2019, and hotel employment was down 61.2%.

The number of air passengers at D.C.-area airports declined 74.6% in July, the most recent month for which data is available.

Retail sales in the District, less exposed to tourism and commuter spending, averaged about 90% of 2019 levels this year,

Read the full report, which also includes employment, wages and housing data.

Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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