Politics & Government

Lacey sales tax revenue rises 11.5 percent at midyear

The Lacey City Council finance committee received a midyear update on the city’s financial outlook.
The Lacey City Council finance committee received a midyear update on the city’s financial outlook. rboone@theolympian.com

Lacey’s finance director delivered some good news this week, reporting to the City Council’s finance committee that sales tax revenue continues to flow to the city at a better-than-expected rate.

Sales tax revenue is up $512,000, or 11.5 percent, through the first half of this year over the same period last year, he said.

“It’s still coming in very strong,” Troy Woo told the committee, which is comprised of Mayor Andy Ryder, Deputy Mayor Cynthia Pratt and Councilman Lenny Greenstein.

Driving that growth is construction spending. North Thurston Public Schools has embarked on a new round of school construction and renovation projects, while single-family residential construction has remained brisk as well.

Through July, the city has issued 232 single-family building permits, compared to 180 a year ago, and could finish the year with 375, Woo said.

Most of that residential construction is taking place in northeast Lacey.

“It’s crazy out there,” Mayor Ryder said. “It reminds me of the old days.”

During the boom in housing before the Great Recession, the city issued as many as 1,200 single-family residential building permits in one year.

Other city revenue categories that showed improvement at midyear:

▪ Electricity and natural gas utility tax totals were higher by almost $300,000, thanks to a more typical, colder winter than the previous year.

▪ Water, sewer and stormwater utility tax totals were higher by $117,000 because of April’s hot weather. But Woo also pointed out that water sales fell 22 percent in June and 11 percent in July because of the milder summer weather.

▪ Telephone-generated utility tax — a category that has been in a steady decline due to the shift from landlines to mobile phones — fell about $28,000 from the previous year.

Greenstein asked Woo whether there was anything in the sales tax data that concerned him. Woo remained mostly positive, although he did mention the potential one-time nature of construction-generated sales tax revenue.

A Sports Authority store has closed in Lacey, but he didn’t expect that to have much of an effect on overall sales tax revenue.

He did, however, question the future of the outdoor sporting goods store Cabela’s in northeast Lacey.

Late last year, Nebraska-based Cabela’s announced that it was going to “explore and evaluate a wide range of strategic alternatives to further enhance shareholder value.”

Woo wondered whether that might result in a sale or takeover of the store.

If that happened, it might put a dent in a category of sales taxes called “general merchandise stores.” The city had projected 2 percent growth through the first half of the year for that category; instead, sales taxes rose 3.7 percent.