County economy news better than expected

There’s been little more ‘cha-ching’ in the local economy than county officials were expecting.

As of June, sales tax receipts were up 5 percent over last year, according to county Auditor Si Stephens. If the trend continues, sales tax by the end of the year will generate about $150,000 more in revenue than anticipated, Stephens said.

“It was good news and somewhat unexpected,” he said of the latest report from the state Department of Revenue. “And I think we’ll see a strong July and August.”

Ferry ridership during July and August was also better than expected, although the numbers were down slightly from 2001, when the economy was booming, just prior to Sept. 11 that year.

The number of vehicles traveling between Anacortes and the San Juans was down by 1.4 percent compared to 2001, while ridership dropped by 0.6 percent. But ferry officials were predicting a decline of 3 or 4 percent. The number of vehicles traveling to Sidney dropped 7.2 percent, while ridership was down 8.9 percent.

Despite the encouraging figures, county officials last week continued to wrestle with an anticipated shortfall in revenue forecasted for 2004. Unless programs are eliminated, jobs are cut, or voters approve an increase in local property taxes, the county general fund will come up short by roughly $550,000, according to earlier budget forecasts.

Should the positive trend in local sales continue, Stephens said county commissioners will still have to find an answer for a $400,000 hole in the general fund. About 72 percent of the fund supports wages, salaries and employee benefits.

Sales tax is the general fund’s second largest source of income and trails only the revenue generated through property taxes, but not by much. In 2002, the general fund included $2.8 million in sales tax and $3.1 million from property taxes. Overall, the general fund was $11.5 million last year.

Initiative 747, approved by state voters two years ago, limits government growth to 1 percent per year through property tax increases without voter approval. The county has also taken a financial beating by a drop in investment earnings during the past two years. Revenue fell $50,000 from 2001 and 2002, and is expected to drop another $221,000 this year.

Commissioner John Evans said the county work force and payroll is “no longer sustainable” given the downturn in the economy and the limits imposed under I-747. Cuts will be painful, but necessary, if voters are expected to support an increase in property taxes, he said.

“If we’re asking citizens for more money, we have to have some discipline on how it’s spent,” Evans said.

Commissioner Rhea Miller said payroll is not the only future expense the county must contend with. Medical benefits continue to climb and liability costs have increased 20 percent. Still, she added, each year the county faces another $350,000 in added expenses to cover cost-of-living, salary and wage increases of its employees.

Miller said the commission should target $350,000 in cuts before voters are asked in the November election to approve a 20-cent increase in the property tax levy. It would demonstrate fiscal restraint, hopefully earn public confidence and encourage voters “to give us the support we haven’t had in the past”.

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