Lacey City Council retreat gets some good news on revenue

On a day when Lacey City Council and staff members were hunkered down to discuss deficit-challenged city budgets, some good news emerged: sales tax revenue to the city continues to show improvement.

Finance Director Troy Woo shared that bit of information Thursday during the council’s all-day retreat at Cebula Hall on the campus of Saint Martin’s University. The council had gathered to continue its conversation about developing a six-year plan to address future general fund operating budget deficits.

The city finds itself saddled with modest deficits because sales tax revenue has recently been flat. Combine that with increasing labor and other expenses and the general fund budget shows a shortfall.

Woo said he presented the City Council with some worst-case budget scenarios Thursday, but going into 2016 at least, the general fund revenue picture is improving.

That’s because sales tax revenue through the first half of 2015 has climbed 10.6 percent, or an additional $422,000, compared with the same period last year. Driving that growth is sales tax revenue generated by new construction, both commercial and residential. Commercial projects include the construction of South Puget Sound Community College’s new Lacey campus and a new middle school in northeast Lacey.

As for residential construction, 151 single-family residential building permits have been issued through midyear, compared with 132 permits for the same period last year. Based on permit activity so far, the city expects to exceed its original target of 250 building permits.

The extremely hot weather has paid off for the city, too, Woo said. Water sales at midyear were $664,000 higher than at midyear 2014, city data show.

Four months ago, Woo said he forecast a general fund deficit of about $800,000 for next year. That deficit is now lower, he said, although he didn’t have an updated figure.

Also discussed on Thursday:

▪ The council was open to the idea of expanding the Regional Athletic Complex as a way to continue to bring dollars into the community. As the drive north on Interstate 5 gets more challenging, and people decide to either stay home or drive south, the RAC becomes more of a destination, City Manager Scott Spence said. Spence floated the idea of a 1,000-seat baseball stadium that might be used by Saint Martin’s baseball team.

▪ The council also was open to the idea of forming a joint venture with the Port of Olympia, possibly creating an industrial incubator on land in northeast Lacey. Councilman Lenny Greenstein suggested that a conversation take place with the port after the general election because the port could be adding two new members to the three-member commission. Port commissioner Bill McGregor, whose seat is not up for election, represents District 2 which includes Lacey.

▪ The council, too, expressed support for funding economic development efforts by using half of the interest earnings generated from the general fund, which represents about $50,000.

This story was originally published August 6, 2015 at 6:11 AM with the headline "Lacey City Council retreat gets some good news on revenue."