City of Lacey sales tax revenue was better than expected for 2014, following an uptick in revenue during the second half of the year that was driven by commercial and single-family residential construction, the city’s finance director said Monday.
Through May of last year, sales tax revenue had fallen behind 2013 levels, but construction in the second half of the year slowly whittled away at the deficit, Finance Director Troy Woo said.
“We’re going to finish ahead of last year’s budget projections,” he said.
The city finishes 2014 with sales tax revenue rising 3.2 percent, or $318,000 more than budgeted, he said.
Construction generates taxable retail sales, and currently no commercial project means more to the city than the new South Puget Sound Community College campus under construction on Sixth Avenue.
A new, smaller format Walmart grocery store also was built and opened off Yelm Highway last year, Woo said.
In addition to commercial construction, the city finished the year issuing 314 single-family residential building permits, or 100 more than in 2013, he said.
Those improved sales tax revenue numbers were reflected in retail sales data for the third quarter of 2014, which were recently released by the state Department of Revenue.
Overall taxable retail sales, which includes retail sales generated by construction and other business activity, rose nearly 6 percent for the third quarter of 2014 from the third quarter of 2013.
Although the city got a welcome boost from construction, consumer spending remained flat.
Retail sales generated by consumers eked out a marginal gain, rising 0.77 percent in the third quarter of 2014 from the same quarter in 2013, the state Department of Revenue data show.
Sales tax revenue represents 21 percent of the city’s general fund budget, Woo said. And flat consumer spending is a concern for the city, so officials want to better plan for the financial future by locking in a six-year budget plan through 2020. Lacey City Council is working through that process.
Consumers in Lacey, though, do have some new destinations to spend money, including Burlington, formerly Burlington Coat Factory, which opened off Martin Way. Sports Authority and Petco opened at Lacey Marketplace. All three stores opened last year and filled existing vacancies.
A vacancy in Lacey that has yet to be filled is the former Albertsons at Pacific Avenue and Carpenter Road.