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Show Foundation Reports Business increases in Cedar City Area Business volume, as measured by local sales tax receipts increased 't by 3.8 percent in Cedar City last year, according to an analysis just completed com-pleted by the Utah Foundation, the private tax research organization. A major factor in this increase, however, was inflation; which rose by 11.3 percent in 1979. The study shows that gross sales in Cedar City last year totaled $77,371,000. This compares with $74,519,000 in 1978, $50,811,000 in 1975, $29,496,000 in 1970, and $18,912,000 in 1965. Throughout the state, business activity, as measured by the sales tax slackened in 1979. While total sales volume in Utah rose by 10.7 percent last year, this was less than the inflation in-flation rate, and the "effective" sales volume, after adjustment for inflation actually declined 0.5 percent. Foundation analysts believe that this "decline" was a temporary aberration resulting from a number of unusual factors and is not the reflection of a weak Utah economy. They note that the large number of sales tax refunds made last year may have distorted the sales volume data. In additon, the report cites the following special factors that slowed sales tax collections in 1979: 1. Escalating energy costs made a smaller portion of the average family budget available for expenditure on items that are subject to the sales tax. 2. Rising interest costs discouraged sales of high-priced items and encouraged en-couraged the repayment of old debts. 3. Higher gasoline costs contributed to a slowdown in the usual summer tourist business last year. 4. High motor fuel costs also resulted in reduced sales of large automobiles, boats, recreation vehicles, etc. 5. A slump in new housing construction con-struction reduced sales of building materials, appliances, furnishings, etc. 6. Recession fears made people more cautious about undertaking new financial commitments. As evidence that the slowdown in sales volume last year was caused by tghese special factors rather than by a weak economy, the Foundation noted that population growth and income growth were both strong in Utah. Last year, Utah's population increased by 50,000, or 3.8 percent. Since 1970, the state's population has grown by more than 300,000 and Utah is the sixth fastest growing state in the nation. Total personal income in Utah rose by 15.4 percent last year. Even after adustment for inflation, the "real" gain amounted to 3.7 percent a rate well above the U.S. average of 0.7 percent in 1979. Foundation analysts observe that personal income in Utah has been rising at a much faster pace than that of the nation as a whole throughout c the 1970's. Between 1970 and 1979, the increase in personal income (after adjustment for inflation) in-flation) has averaged 5.1 percent per year in Utah, compared with 2.9 percent per year throughout the U.S. Although personal income gains in Utah have been well above the U.S. average during the past decade, the reverse was true in the 1960's. Bet-, Bet-, ween 1960 and 1970, for example, adjusted personal income increases averaged 3.9 percent per year in Utah and 4.3 percent per year in the nation. Even though Utah's economy currently is growing at a faster pace than that of the nation as a whole, the state still lags behind the U.S. average in per capita income. The study observes that the large number of : children and non-income producers is a major factor in this below-average showing. When personal income is related only to the adult population, Utah is found to be only 5'2 percent below the U.S.' average rather than the 16.7 percent deficiency shown when personal income is related to total population. , The report emphasizes that the large number of children in the state results in higher governmental costs, especially for public ' education. Education accounts for nearly half of all state and local spending, and Utah leads the entire nation in the proportion of total spending going for education, because of its large student enrollment. |