Several of Lacey's largest general fund revenue sources are expected to dip in 2011, an official told the City Council on Thursday evening.
Finance Director Troy Woo outlined a projected revenue stream for the city’s $31.49 million general fund that includes a 3.81 percent drop in sales tax receipts and a decline in property tax revenue because of the city’s annexation into Lacey Fire District 3.
Despite the declines, Lacey’s proposed $107.37 million budget calls for maintaining service levels and no staff layoffs. Before the meeting, Woo noted that while the recession is technically over, Lacey has yet to see any strong growth, and that’s reflected in the revenue outlook.
“We’re hopeful things will turn around,” he said. “Looking long term we can’t continue to maintain the level of service we’ve done.”
The single largest decline in revenue comes in property tax collection. By annexing into Lacey Fire District 3 and no longer needing to pay for services, the city reduced its levy collection by $4.72 million. About $93,000 in collections could come to the city if the council votes to collect the 1 percent property tax levy limit allowed by state law – an amount city officials admit won’t even cover the increasing cost of labor.
“It doesn’t take a whole lot to figure out it’s going to be difficult to sustain that in the long-term,” Woo said.
The council is scheduled to set 2011 property tax levy rates during its Nov. 18 meeting.
Revenue tied to consumer spending and construction also is down.
With the drastic cut in property tax collections, sales tax is now the city’s largest contributor to the general fund. And Lacey anticipates $325,800 less in sales tax revenue next year.
As the result of the housing crisis, Woo said the city continues to see sharp declines in sales tax receipts linked to building materials, trade contractors and furniture and home furnishings.
However, there are signs of a rebound. After nearly two years of sales tax declines, receipts were up in August, and October could also come out positive, Woo said.
Nate Hulings: 360-754-5476 firstname.lastname@example.org