Lacey projects 8-year high for sales tax revenue in 2016

If current trends hold, sales tax revenue for the city of Lacey is projected to reach $9.38 million in 2016, the highest it has been since 2008, Finance Director Troy Woo told the City Council Thursday night.

The sales tax data were disclosed as part of a discussion about next year’s city budget.

Sales tax revenue for 2015 is currently up 13 percent. Much of that gain has come from commercial and residential construction, including the recently completed South Puget Sound Community College campus in Lacey, a new middle school in Hawks Prairie and a new plasma donation center that recently got underway.

Of the top 20 sales tax revenue categories for the city this year, 19 have shown gains from 2014.

The two largest are general merchandise stores and food services and drinking places. Both have climbed at least 3.4 percent in the past year, the data show. A category called “construction of buildings” has had the largest percentage gain, 100 percent in the past year.

Sporting goods are down 0.6 percent in the past year, while food and beverage stores have been flat over the same period.

Councilman Virgil Clarkson wanted more information about why that category was flat. Woo explained that not all items in grocery stores are taxed. It also could mean that Lacey has experienced some “leakage,” or Lacey shoppers leaving the city to shop elsewhere, he said.

One example could be shoppers headed to the relatively new WinCo Foods on Martin Way. While the store is in Lacey’s urban growth area, it’s in unincorporated Thurston County for tax purposes, Woo said.

Some of the revenue loss to WinCo has been made up with the opening of the Walmart on Yelm Highway in south Lacey, he said.

The last time sales tax revenue in Lacey was higher was in 2008, when it totaled $9.86 million. By 2009, it had fallen $1 million because of the recession, Woo said.