Local sales tax receipts up in '01

Construction, new stores boost cities' revenues

SCOTT WYLAND, THE OLYMPIAN

Originally published Saturday, March 2, 2002

THURSTON COUNTY -- Neither an earthquake nor a waning economy nor the Sept. 11 attacks could push South Sound cities' sales tax revenue into a decline in 2001.

Thurston County's four largest cities all reported an increase in state sales tax revenue last year, a trend that has been attributed partly to construction activity and also to the county's stable base of government jobs.

The state allots cities about an eighth of the sales taxes collected within their jurisdictions. Because of a two-month lag, the figures for 2001 were released this week.

South Sound's retail sector held its ground when much of the state's retail trade was down -- leading to greater sales tax revenue, said Gary Kamimura, regional economist for the state Employment Security Department.

Fred Meyer, Target

The addition of Fred Meyer in Tumwater and Target in Lacey not only benefited those cities but the county as a whole, Kamimura said.

"You're seeing the kinds of stores that weather recessions fairly well," Kamimura said.

Unlike upscale department stores such as Nordstrom's or specialty shops, these types of mid- to lower-priced variety stores lure shoppers during a sluggish economy, he added.

The Target store opening and its 1.5 million-square-foot distribution center getting under way helped bump Lacey's sales tax revenue to $4.43 million in 2001, 11.3 percent higher than the previous year.

"So that was a big boost, I'm sure, for us," said Tim McGuire, financial services manager for the city of Lacey.

Construction often has an impact on revenue figures because sales taxes are charged to the projects, McGuire said. When building ebbs, so do taxes.

"A lot of construction can skew these numbers one way or another," said Mike Gowrylow, state Department of Revenue spokesman.

"That's why these numbers don't always reflect what's going on on Main Street."

The county's government job base also keeps it on an even keel, Gowrylow said. "That is a stabilizing factor."

Olympia had a marked slowing in revenue growth from recent years. The city's $12.62 million sales tax revenue in 2001 was a 1.2 percent increase from the previous year.

That compares to 7.3 percent growth in 2000 and an 11.7 percent increase in 1999.

Olympia's anemic revenue growth last year can be attributed to the national recession, the Sept. 11 attacks' impact on tourism and a legislative proposal to defer car taxes, Mayor Stan Biles said.

After Sept. 11, fewer travelers visited Olympia, Biles said. Revenue from the city's lodging taxes dropped 30 percent.

In fall 2001, many people held off buying cars as they awaited the fate of a proposed tax break on automobile taxes, he said. Car sales have a huge effect on Olympia's sales taxes, he added.

Yelm received $727,720 in tax revenues for 2001, a 10.59 percent increase from the year before.

Shelly Badger, Yelm city administrator, said the flurry of residential building contributed to the increase.

Also, more stores are opening in Yelm, giving shoppers more reasons to buy there, rather than in Olympia, Badger said.

Tumwater is showing steady growth.

Its tax revenue in 2001 was pegged at $2.57 million, outpacing the previous year by 8.3 percent. The city's revenue grew by 5.1 percent in 2000 and 4.5 percent in 1999.

Kamimura said South Sound's consumer confidence is helped by the stability of state employment.

The state's budget problems were announced late in 2001, so the impact on state workers' buying confidence wouldn't show up in sales numbers, Kamimura said.

State workers' confidence could be rattled after layoffs begin this year, Kamimura said. "I think we anticipate there will be some jobs lost ultimately."

However, state job losses aren't expected to be as severe or have near the impact on South Sound as Boeing's 30,000 layoffs had on King and Snohomish counties, he said. So state employees have far less reason to be anxious and to crimp spending, he said.

State sales tax revenue

2001 2000

Olympia - 2001 ,$12.62 million; 2000 $12.47 million

Lacey- 2001, $4.43 million; 2000, $3.98 million

Tumwater -2001, $2.57 million; 2000, $2.37 million

Yelm - 2001, $727,720; 2000, $658,737

The Olympian Copyright 2002

back to Taxes 2002 index