Kent city officials called it a “trend stopper” as sales tax revenue in September nearly matched the city’s monthly budget projections for the first time all year.
The city received sales tax revenue of $1.955 million in September, about $35,000 or 1.7 percent under budget. Sales tax revenue ranged from 18 to 33 percent under budget in each of the previous eight months.
“For the first time in a long time we actually have good news,” City Finance Director Bob Nachlinger said at the Nov. 3 City Council’s Operations Committee meeting. “The sales tax revenue (for September) was an absolute trend stopper. We were trending an average of 20 percent under budget.”
Nachlinger said sales tax revenue increased at virtually all businesses across the city during the month of July. The city’s September sales tax revenue numbers were actually collected by the state in July and paid to the city two months later.
Nachlinger expects sales tax revenue to be over budget in November. But he cautioned to read too much into the new numbers looking ahead to the finals months of 2009.
“This doesn’t create a trend, but it can stop a trend,” Nachlinger said.
Kent Mayor Suzette Cooke was pleased to see the change.
“It’s about time we were able to see results in the sales tax closer to projections,” Cooke said after the committee meeting. “It’s a good sign. But like Bob said this is trend stopper and not a trend setter.”
Councilman Tim Clark, chair of the Operations Committee that helps oversee the city budget, still expects budget troubles for the rest of the year because of drops in utility taxes and building permit fees.
“I have struggled with the positive vision the administration puts forward,” Clark said in an interview after the committee meeting. “The utility tax and permits are down. There are other fund burdens not addressed.”
Utility taxes brought in $1.01 million in September to the city, about $144,000 or $12.5 percent under budget.
In response, Nachlinger said utility taxes are lower due of two Puget Sound Energy rate reductions this year to customers.
“The tax is based on what they take in and when they take in less, we get less,” Nachlinger said in a phone interview Monday.
But the city has brought in more revenue than originally budgeted from a rate increase last June in water, sewer and drainage rates, he maintained.
“It will not balance out completely, but it will be close,” said Nachlinger, who estimated the utility tax shortfall at about $300,000 for the year.
Building-permit fees brought in $99,400 in September to the city, about $12,300 or 11 percent under budget.
The city has reduced expenditures by $6 million this year to try to balance the shortfall in revenue from sales taxes, utility taxes and other fees.
Nachlinger said that a $10 million collection in property taxes in October will help the city balance its budget by the end of the year with a projected positive general fund of $6.1 million.
Clark said he also has concerns that the city will see an estimated reduction of $1.2 million in revenue from Fire District 37 that contracts with the city to provide fire service to unincorporated Kent as well as Covington.
Nachlinger said that $1.2 million reduction in revenue from the fire district will impact the 2010 budget and has been addressed with a reduced 2010 preliminary budget submitted last month to the City Council by the mayor. The preliminary budget is now under consideration by the Council with adoption scheduled for December.
The city’s revenue from the fire district dropped because of a 16 percent decline in assessed property valuation in the district’s service area.
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