It’s no secret that tourist dollars account for a large percentage of the city of Sedona budget. But just how much has it varied over the years?

City officials agree that it’s impossible to determine the exact percentage of sales tax generated by visitors as opposed to residents, but using a variety of formulas and statistics, they feel they can get fairly close. 

Last year, City Finance Director Cherie Wright and Economic Development Director, along with Sedona Chamber of Commerce President and CEO Jennifer Wesselhoff, met several items to try and best determine that percentage for several reasons. One of those is the fact the city has shifted its budgeting practices to a program/performance-based methodology in part to gain a better understanding of the total cost of programs and how they are funded. 

“Primarily, in our community, we are so heavily tourism-focused that a large portion of our revenues are generated from visitors,” Wright said. 

“That can have a pretty significant impact for us particularly with any changes in the economy. Whenever we end up in another recessionary period, hopefully much more mild than the last, it still would have an impact on us because one of the things that happens during a recession is that people typically would do less travelling. So, we can be hit more by those types of things than other communities that don’t rely so much on those types of revenues.”  

Based on an updated analysis, the three estimate that 23 percent of sales tax is generated by residents and 77 percent by visitors. This figure has jumped more toward tourists in less than five years. 

In 2014 an analysis was performed to estimate the portion of sales tax generated by residents compared to visitors, Wright said. At that time, an estimated 35 percent of sales taxes was generated by residents and 65 percent of sales taxes was generated by visitors. While the underlying methodology used was left unchanged, she said updated analyses based on 2015 and 2016 sales tax dollars reflected a slight change in estimates of 34 percent of sales taxes generated by residents and 66 percent by visitors. So why the jump? 

“We have had substantial growth, especially since the last recession,” City Manager Justin Clifton said. 

“Even if the methodology was sound before, you would expect a significant change between then and now because of the substantial growth rate we’ve had in sales tax. That almost has to be attributable to growth in tourism since we don’t have any substantial new retail opportunities or substantial new employment opportunities.” Wright, Spangler and Wesselhoff calculated the estimated total sales tax dollars generated by residents and divided by the resident population. They converted this amount to estimated taxable purchases, which resulted in approximately $14,800 spent annually by each resident on taxable purchases. This represents approximately $285 spent each week or $1,235 spent each month by each resident on taxable purchases. Based upon the average of two people per Sedona household with an average household income of $56,607, that household spent approximately 26 percent of its income on taxable purchases.

During their research — based upon interviews with 24 local restaurants — 82 percent of their patrons are visitors and 18 percent residents while the two grocery stores surveyed estimate that 59 percents of the customers are locals. In addition, overall retail sales shows 58 percent coming from visitors and 42 percent from residents.