SEQUIM — The city of Sequim saw its biggest sales tax receipts ever last year, city staff said.
Staff members said that the city brought in 9 percent more in sales taxes than budgeted — $2,572,497 total.
That’s $211,855 more than 2014 and continues a three-year upward trend for the city after decreases from 2011 to 2012, staff members said.
It’s also nearly double Sequim’s 2004 total of $1,319,954 when the city began seeing an increase in big box retailers developing and moving into city limits.
But what does an increase mean for city residents?
Sue Hagener, administrative services director, said when sales tax receipts are more than projected, the excess is typically saved for future projects.
She said city officials look at revenues with other finances with the goal for a healthy ending fund balance between $1.4 million and $2.2 million, as stated in the city’s guidelines.
Currently, the city is at $1.8 million.
In 2012, the city saw a better-than-expected increase at 9 percent, or about $141,000 more, which contributed to a $1.75 million fund balance, Hagener said.
The City Council used money from the city’s general fund to purchase the former Gull Lot at the corner of Washington Street and Sequim Avenue, which they later renamed Centennial Plaza, 104 W. Washington St.
Hagener said no plans have been finalized for the excess funds from 2015 as of yet.
He pointed out a number of practical options — save the money, pay off debt, and/or apply it to equipment reserves, such as street vehicles, police vehicles and information technology equipment.
Connie Anderson, deputy administrative services director, said that about five years ago, the city went through a review process of its fleet and equipment, measuring all of the specifics and creating a replacement schedule.
“We’ve actually been doing something less than that (schedule),” she said. “Our goal is to get it back to the right levels.”
In February, the City Council approved up to $100,000 from equipment reserve funds for two new police vehicles to replace older Ford Crown Victorias with 2016 Ford Interceptors and extra police equipment.
They also approved purchasing a Ford F550 4WD truck March 14 with additional equipment for snow ice removal for about $89,000.
Sequim Public Works staff estimate its equipment replacement in 2017 would cost about $411,000, $175,000 in 2018 and $361,500 in 2019.
So why the bump?
Hagener said 2015’s sales tax revenue increase might partially be an indication of what’s happening in the construction market.
Within city limits, construction totals continued a three-year upward trend, from $142,777 in 2013 to $209,030 last year.
However, last year’s tax totals from construction most recently compare to 2010 — $217,676 — which came in year four of a six-year downward trend following an all-time high in 2006 of $608,061.
Hagener said the city also saw a “huge bump” in new residential construction permits last year.
In 2015, potential builders filed 62 construction permits in the city with 60 of those residential and two commercial, whereas in 2014, the city saw 34 filed (33 residential/1 commercial).
New remodeling permits also went up from 196 to 208 total.
Along with construction sales tax totals, accommodations and food services went up by more than $25,000 and retail by nearly $103,300.
Hagener said retail increases might be “a reflection of the percolating economy.”
“People are just feeling more comfortable,” she said.
Another reason for a sales tax bump, city staff said, was the 0.2 percent sales tax holiday from Clallam County that went into effect in July 2015 and will sunset April 1.
Anderson said from July-October (reported to the city totals two months later) the tax break provided the city another $31,954.
Since 1997, the city’s sales tax has risen by 0.8 percent and is currently at 8.7 percent sales tax with 0.85 percent going to the city, 0.2 percent to the Sequim Transportation Benefit District and 0.085 percent to the Sequim Public Safety Tax.
Hagener said the city doesn’t have any new general facility tax or impact fees in place but going into 2015, fees in the city, such as permits, were increased by 2.5 percent for service-related expenditures, staff time.
Matthew Nash is a reporter with the Olympic Peninsula News Group, which is composed of Sound Publishing newspapers Peninsula Daily News, Sequim Gazette and Forks Forum. Reach him at [email protected]