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Finance director reports sales-tax and lodging-tax gains; construction permits and building revenue remain subdued
Summary
The citys finance update on July 28 showed cumulative sales-tax receipts of about $3.2 million to date (up roughly 4.9% vs. last year) and a projected lodging-tax total of $561,000 for the year; building-permit revenue and single-family starts remain below prior peaks.
The citys finance update on July 28 showed mixed revenue signals: sales and lodging taxes are tracking above recent years, while building-permit activity and single-family housing starts remain low.
Why it matters: Sales-tax and lodging-tax receipts underpin base municipal services and LTAC supports tourism-related projects; their direction affects budget choices and capital planning. Lower building-permit activity reduces development-related fee revenue and suggests a slower construction market.
Finance staff member Hoglund presented the quarterly update and said that, through July receipts (which reflect May activity for sales tax), cumulative sales-tax collections are about $3.2 million, "up about 4.9%" from the same period last year and about 6.3% over the year-to-date budget. Hoglund attributed a large share of the July sales-tax increase to online retail (NAICS category "other miscellaneous retailers") and heavy construction related to the citys wastewater outfall project; he noted single-family construction-related receipts were down.
On lodging taxes, Hoglund reported $243,000 collected through May and projected full-year LTAC at about $561,000, consistent with recent years. Councilmember Walters asked whether LTAC might be used to support the proposed event centers debt service; staff said that LTAC is the likely debt service source if the city issues bonds to cover its share of construction costs, but final funding decisions depend on design and cost outcomes.
Private-utility tax receipts (electricity, cable, natural gas and telephone) were notably higher than budget, reflecting state clean-energy costs passed through to customers; Hoglund said the private-utility tax category was about 12% higher year over year and more than 18% above budget in the reporting period. Real-estate excise tax collections were about $600,000 year to date; REET receipts derive from recorded property sales and remain variable.
Building-permit volume and revenue were weaker: through June the city issued 16 new-construction permits generating about $117,000 in permit revenue. Hoglund and councilmembers observed that the citys new permit software (SmartGov) and current market conditions make year-over-year comparisons imperfect, but the overall trend is lower single-family starts compared with pre-pandemic peaks.
Other items reported: the citys cash balances, rainy-day and restricted balances were outlined; staff noted a $25,000 deductible on a new equipment-insurance policy that staff proposed addressing by a one-time general-fund transfer to the equipment-rental internal fund. The council also approved a non-substantive update to the unified fee schedule clarifying cemetery terminology and stormwater-review language (Resolution 31-83), and staff said a second-quarter budget amendment ordinance would return on next weeks consent agenda so members could review details.
Ending: Staff will refine permit- and revenue-trend detail and provide follow-up on the insurance-deductible funding source and the budget-amendment ordinance. Council members requested additional analysis tying revenue increases to specific NAICS sectors for future updates.
