The city of Kent had another booming year for business and occupation tax revenue.
Kent took in $9.3 million in B&O tax revenue in 2016, according to figures released on Tuesday night by the Finance Department at a City Council workshop. That’s a 21.6 percent increase in revenue from the previous year, shattering a record-setting $7.6 million amount in 2015.
The council adopted the tax, which started in 2013, to help pay for street repairs because so many roads in town were worn out. Staff costs were $703,040 in 2016 with the rest available for street repairs and projects.
The council in 2014 approved four new positions at an additional cost of about $425,000 to staff the program in an effort to boost tax revenues. The program began with two staff members in 2013.
With more staff to track down businesses to make sure they are paying the tax, the numbers continue to climb. There were 3,390 taxpayers in 2016 compared to 2,590 in 2013.
In addition to B&O tax revenue, Kent’s overall tax revenue picture remained solid in 2016.
“The good news is there isn’t any surprises in the 2016 year-end report,” said Finance Director Aaron BeMiller, who added he gives monthly reports to the council’s Operations Committee to help keep it updated about the city’s revenue numbers.
“General fund revenues in 2016 outpaced our general fund budget by about $5.1 million or 5.7 percent,” BeMiller said. “General fund revenues by tax type across the board, everything is up from previous years.”
Property tax revenue hit $22.5 million in 2016 compared to $22 million in 2015, a 2.4 percent increase. Sales taxes brought in $19.8 million compared to $18.5 million, a 6.6 percent hike.
All of the strong revenue flow allowed the city to boost its general fund cash reserves in 2016 to $16.4 million or 18 percent of the general fund budget. The reserve fund was $11.7 million in 2015 or 13.5 percent of the budget.
The council already decided to use $2 million from the cash reserves in 2017 to help pay for park projects. Despite the expenditure, city staff estimates general fund reserves will hit $16 million at the end of 2017 or 16.8 percent of the $94 million budget.
The council plans to adopt a policy later this year that keeps at least 16 percent of the general fund budget in cash reserves. The current policy requires a 10 percent fund balance.
The city’s budget also looks strong for the first three months of 2017. The budget shows revenues are nearly $1.4 million ahead of expenditures.
“We are very, very early in the year but our revenue is coming in about where we want it,” BeMiller said. “No alarms there.”
But at a council workshop on June 20, BeMiller and his staff plan to go over the fiscal cliff facing the city when it eventually loses nearly $4.5 million per year it gets from the state for the 2010 Panther Lake annexation. That revenue stream expires in June 2020. The general fund balance would drop into the negative by 2023 if no steps are taken to make up for the loss of nearly $4.5 million per year, according to city budget documents.
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