Better-than-expected sales tax revenue helped the city of Lacey balance its budget in 2015 and that trend continued during the first month of the new year, Finance director Troy Woo reported last week.
Sales tax revenue in January saw double-digit growth, rising 12.4 percent more than the amount collected in January 2015, he said. About $728,000 flowed into city coffers, which is $80,000 more than the same period last year.
Woo said it was the best January for the city since 2010, an indication that the city has come a long way since the recession and that the economy continues to improve.
Driving that growth is sales tax revenue generated by commercial construction, which was up 88 percent. The city got a good sales tax push from that kind of construction last year — the new Lacey campus of South Puget Sound Community College paid off nicely for the city — and the city continues to benefit from investments made by North Thurston Public Schools. The school district is renovating North Thurston High School and is building a new middle school in Hawks Prairie.
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The February and March sales tax data aren’t in yet, but the city should continue to see its share of construction-related sales tax revenue. A new plasma center is nearly complete on Martin Way East and work has started on a 600-plus unit multifamily development next to River Ridge High School. The Providence Multi-Service Clinic also has broken ground at 4800 College St. SE.
Nonconstruction categories also showed positive trends, Woo said.
General merchandise stores — the single largest sales tax category for the city by dollar volume — rose 2.4 percent in January after being flat last year.
Another encouraging sign is that consumers are spending money, Woo said.
A category called “food services and drinking places” rose 9.3 percent in January.
“That’s a positive,” Woo said about consumers and disposable income. “Their willingness to spend.”
Consumers may have been helped by falling fuel prices in January, according to AAA data.
Olympia area prices for regular unleaded fell to around $2, down about 70 cents from the same period last year, the data show.
At the beginning of 2015, the city estimated a general fund shortfall of about $840,000. But improving sales tax revenue the rest of the year helped to lower that general fund deficit to around $150,000. For 2015, sales tax revenue grew 14 percent.