Sales tax history, volatility discussed at City Council meeting
3/20/2013 9:51:48 AM
By Craig Howard
Just about three months ago, Liberty Lake Finance Director RJ Stevenson stood before representatives of the City Council and gave the abbreviated history of municipal revenue sources.
Hearkening back to 2007, when proceeds from sales tax reached a peak of $2.24 million, Stevenson advised the governing board that the city had not quite returned to the boom days that proceeded the nationwide recession. Projected income from sales tax for 2013 was pegged at $1.95 million.
"Sales tax can be an unstable revenue source," Stevenson said on Dec. 18. "We haven't quite fully recovered to where we were in 2007, even though there is some encouraging news out there. We need some other revenue source to pay for the capital needs of the city."
Later in the same meeting, council members unanimously approved the 2013 budget, opting to retain the 3-percent utility tax on electric, gas, cable, phone and waste management services. In his budget, Mayor Steve Peterson counseled that the funds should be earmarked specifically for road maintenance.
While the 3-percent toll on utilities has remained in effect for the first part of the year, there have been some rumblings from certain members of City Council that the tax should be removed, or at least restructured in a way to reduce the percentage paid on electric and gas, thereby lessening the burden on local businesses.
Meanwhile, the city has been working to gather cost estimates on a pavement management program that is the beneficiary of the utility tax. Spearheaded by City Engineer Andrew Staples, the report is expected to be finished by mid-April.
At Tuesday night's City Council meeting, Stevenson delivered the first of three presentations on revenue forecasting, beginning with a rundown of sales tax. Similar summaries on property tax and the utility tax will follow at council meetings in April.
In Liberty Lake, sales tax revenue represents 35 percent of the overall budget for 2013, with the funds being utilized for public safety, city parks, administration, general services and capital. In comparison, the utility tax comprises 13 percent of the budget.
While Liberty Lake residents join their Spokane County neighbors in paying 8.7 percent in sales tax on retail purchases, the highest toll is paid by those who reside in King County at 9.5 percent. On a $100 purchase, Stevenson broke down the destination of the additional $8.70, starting with the State of Washington at $6.50. The city of Liberty Lake is next, with $1.00 going into the general fund and 20 cents finding its way to public safety. The remaining dollar is split between Spokane County (40 cents) and the Spokane Transit Authority (60 cents).
Stevenson noted that the passage of streamlined sales tax legislation – in which the tax is collected at the destination point of the product, rather than the point of sale – explained the local drop in sales tax associated with manufacturing over the years. Washington state adopted the streamlined sales tax law in 2008.
In 2012, revenue from businesses specializing in sales of motor vehicles and parts in Liberty Lake constituted 64 percent of the overall sales tax income in the retail category, or $710,000. While Stevenson and his colleagues at City Hall are the first to applaud a thriving retail market, the finance director pointed out on Tuesday that sales tax revenue can often sway in the wind of a fickle economy.
"Unlike property tax, sales tax can be unpredictable," Stevenson said.
In other city news:
• City Council – minus Shane Brickner and Keith Kopelson, who both had excused absences – voted unanimously to approve the revised interlocal agreement with the Spokane Regional Transportation Council and authorize Peterson to sign the paperwork. The new arrangement will assure Liberty Lake of its own seat at the SRTC policy board. Peterson currently serves as chair of the board.
• Peterson advised the community development committee to take up the discussion of electronic billboards after the topic was raised again during citizen comments on Tuesday.
• Trailhead at Liberty Lake will host a training seminar for the "First Green Foundation" on June 26 with local golf course superintendents instructing representatives from the Washington State Agricultural Teachers Association. Utilizing the standards of golf course maintenance, the program provides lessons in science surrounding topics like soil and water management.
• Liberty Lake City Hall will host a pair of discussions this Thursday, March 21, starting with a public meeting on the Harvard Road Roundabout from 2 to 4 p.m. The gathering will focus on a traffic management plan designed to mitigate the impact of construction on surrounding businesses. Also on March 21, city officials will meet with the Liberty Lake Trail Committee to discuss plans for the Sprague Avenue Trail. The meeting will begin at 7 p.m.
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