City’s sales tax revenue is down so far in 2012

May 8, 2012

By Warren Kagarise

Issaquah municipal government did not collect as much revenue January through March as it did during the same period a year ago, although planned developments could strengthen city finances.

In 2011, sales tax revenues increased almost 10 percent from 2010, but only due to sales tax on construction, mostly related to Swedish/Issaquah.

However, the city received about $6.1 million in revenue through March, down 6 percent — or $393,286 — from the same period a year ago. The figure includes sales tax revenue, building permits, grants and other funding sources.

The construction of Swedish/Issaquah bolstered the 2011 total.

“The difference was, in 2011, we had a lot of sales tax on construction coming in still from Swedish hospital,” city Finance Director Jim Blake said April 24 in a presentation to City Council members. “That died down around April and it went back to a normal type of a sales tax trend that we’ve been seeing.”

Blake attributed the decline in revenue to a spike in onetime costs, including some related to severance packages for city employees shed during a reorganization at City Hall.

In the reorganization, officials touted a more streamlined municipal government and focused less on cost.

The total Issaquah municipal budget is $85.7 million — including about $36 million for police and fire services, community development and planning, parks and recreation, and municipal government.

Issaquah, like other local governments, must make do in the economic downtown. The reshaped economy means reduced sales tax revenue and less money from building permit fees — key sources of city dollars.

Blake offered a conservative estimate and said overall revenue could decline 8.8 percent from last year — although he said sales tax revenue from proposed construction is likely to close the gap.

“It’s kind of like the worst-case scenario. I mean, it could be worse if something unexpected happens,” he said.

However, sales tax revenue related to the construction on the Regency Centers retail complex in the Issaquah Highlands is expected to boost city coffers. (The project received approval from the Urban Village Development Commission on May 1.)

Warren Kagarise: 392-6434, ext. 234, or wkagarise@isspress.com. Comment at www.issaquahpress.com.

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Comments

One Response to “City’s sales tax revenue is down so far in 2012”

  1. Smoley on May 9th, 2012 12:25 pm

    The takeaway from this article is that if there isn’t significant construction happening during the year, there’s likely going to be a revenue shortfall.

    How long before we start hearing chants of “Build, baby, build!”? Is that a sustainable solution?

    I suppose the proposed city ordinance banning plastic shopping bags will make more people want to shop in Issaquah and help offset our declining sales tax revenue, right?

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