Numbers show Tri-Citians still buying

In spite of the gloomy national economy. Tri-Citians still are buying cars, clothes and eating out in large enough numbers to generate healthy sales tax revenue for city governments.  Kennewick’s taxable retail sales of about $365 million in the second quarter of this year were up 2.82 percent from the same period in 2007.

Pasco’s taxable sales also increased from April to June this year, up to about $246 million. That was a 5.9percent increase over the second quarter of 2007. But Richland’s taxable sales fell more than 5 percent, which Gary Ballew, city business and economic development manager, said was largely caused by the end of the Highway 240 construction project. The city’s taxable sales dropped to about $204 million in the second quarter this year from almost $216 million in the same period a year ago.

Tri-City sales were generally stronger than elsewhere in the state. Mike Gowrylow, spokesman for the Washington Department of Revenue, said statewide total taxable retail sales declined 2.4 percent for the period to $29.1 million. Though Tri-City taxable sales overall showed growth in the second quarter this year, there were signs of slowing. Last year, second-quarter sales showed an annual gain of 9.5 percent in Kennewick, more than 11 percent in Pasco and 12.7 percent in Richland.

The slowdown didn’t immediately hit second-quarter revenue receipts from the sales tax that the state paid to area cities. Receipts are for prior months and can include adjustments that the state makes based on updated sales information. Second-quarter retail tax receipts in Kennewick were about $3.15 million, up from $2.94 million in the same quarter last year. Marie Mosley, Kennewick’s executive director for support services, said the city’s sales tax revenue grew 11.5 percent in April, 7.6 percent in May and 2.7 percent in June this year when compared with the same months in 2007.

In Pasco, retail tax receipts increased from about $1.96 million in the second quarter of 2007 to more than $2.1 million in the second quarter this year, up about 7 percent. And Richland collected $1.85 million in sales tax from April through June 2008, up from $1.71 million in the same period last year. While the area economy has been strong, Tri-City officials say they are bracing for a potential decline in taxable sales receipts as they prepare budgets for the next two years.

Retail sales tax, which includes revenues from direct and indirect retail trade and use tax on goods purchased in other states, supplements the utility and property taxes collected by local governments. Retail sales tax revenue is more volatile, said Gary Cruthfield, Pasco city manager. He compared it to commission income, while receipts from utility and property taxes are more stable like salary. Auto sales still were holding well in Pasco in the second quarter, but contraction in construction activity hurt the city’s retail sales revenue, said Cruthfield.

New construction spending in Pasco was worth $180 million in the 2004-05 fiscal year but has dropped in the current fiscal year to about $100 million, he said. The loss of each $10 million in construction spending means a proportional loss of about $100,000 in sales tax revenues for the city, he said.

Also, once Chiawana High School is built, sales tax revenue from that project will dry up, Cruthfield said. he said although the Tri-Cities is doing well ion the face of a general economic downturn, it’s good to be prepared so the city’s next budget will be based on 93 percent of the previous year’s sales tax revenue.

Mosley said of the $81 million in projected revenue in Kennewick’s 2009-10 budget, about $30.5 million is expected to come from retail taxable sales. While she has noticed a minor drop in third quarter sales tax revenues. Mosley thinks new economic developments will take care of any potential shortfall in the months ahead. Mosley said the city’s second-quarter sales of auto, electronics, appliances, building materials, garden equipment and supplies and clothing and accessories were improved over the first quarter.

But she said people weren’t buying big-ticket items such as trucks and SUV’s. She also suspects Richland’s new Target and Kohl’s stores contributed to the slowing of clothing sales in Kennewick. Mosley said a slight dip in sales tax revenue doesn’t mean “doom and gloom” for the Tri-Cities, “but we know we can be vulnerable if there’s any downturn”. Ken Nelson, Kennewick’s economic development director, said a new hotel and a branch of HAPO Community Credit Union that are being built at Southridge should boost sales tax receipts. He also expects retail sales to pick up during Christmas. Richland’s Ballew said sales tax revenues are up to the third quarter by about 2.3 percent compared to last year. he said Kohl’s and Target are helping drive up retail sales in the city, as are construction projects at Pacific Northwest National Laboratory. he added, “We’re doing pretty well locally”.


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