Sales tax revenue up overall for Bothell and Kenmore, despite construction impacts

Many people are starting to feel the economy move into positive territory - no matter how slowly. That feeling is translating into the ring of cash registers around the state. But other sectors in Kenmore and Bothell, such as construction, are muddying the economic waters.

The Washington State Department of Revenue announced Oct. 5 that the state’s overall taxable retail sales increased 4.7 percent to $26.8 billion during the second quarter of 2012 compared to the second quarter of 2011.

Retail trade increased 5.3 percent to $12.3 billion over the second quarter of 2011. Retail trade is a subset of all taxable retail sales that includes retailers but excludes other industries such as services and construction.

Among major industries, construction was up 7 percent to $3.9 billion, accommodations and food services increased 5.4 percent to $3.2 billion, motor vehicles and parts rose 12.9 percent to $2.9 billion, and general merchandise stores were up 2.1 percent to $2.4 billion.

In King County, taxable retail sales increased by 6.4 percent, while retail trade was up 6.1 percent from 2011.

But for areas of Bothell in King County, the trend went the opposite direction with a loss of more than $24 million, or 15.34 percent, for taxable retail sales. The retail trade sector saw a loss of more than $14 million or 26 percent. But those numbers have more to do with 2011 than 2012.

“The city received a higher than normal level of sales tax in the second quarter of 2011, which leaves 2012 missing its mark,” said City of Bothell Finance Director Tami Schackman. “Sometimes you have month-to-month abnormalities.”

Schackman said that the year-to-year numbers are more in line with the county’s second-quarter numbers.

“In July we saw an increase of 5.5 percent in sales tax,” Schackman said. “In the first seven months we were up $19,000, so you have to look at the larger picture.”

Some of the evidence that Bothell’s overall economic numbers are improving lie in the Snohomish County revenue numbers. The Snohomish County half of Bothell saw a dramatic increase of 15 percent in retail sales, with tax revenue jumping more than $12 million.

Revitalization efforts during the past few years have kept construction sales tax higher than many other areas. But inclement spring weather helped artificially suppress the numbers.

“We were down 18 percent in construction year-to-year,” said Schackman. “We do anticipate that construction will improve in the fall.”

Trade sales revenue was slow, only increasing by $346,000 or 1.23 percent.

Overall, Snohomish County retail sales were up 4.9 percent, while trade was up 7.6 percent, the most in the state.

Kenmore sales tax

According to King County, Kenmore saw an increase in retail sales of 5.63 percent and sales tax revenue went up by a little less than $3 million. A 7.38 percent increase in retail trade was reported, with tax revenue increasing by a little more than $1 million.

City of Kenmore Director of Finance Joanne Gregory said that there is a disconnect between the state and city numbers.

“Although the state reports an increase in taxable sales of 5.63 percent in the second quarter of 2012 over the second quarter of 2011, our actual sales-tax revenue increased 2.33 percent over that period,” said Gregory. “Various industry sectors are up and down and there hasn’t been any significant trending that I can see. Right now the wholesale sector is trending up but it’s only 6 percent of our total receipts.”

But Gregory said that the state’s numbers for the second quarter of 2011 were lower than the city’s revenue figures, leading to an increase difference for 2012.

One big change in the future for Kenmore is a decrease in construction revenue, as the gigantic Brightwater project comes to an end in Kenmore.

“I estimated that 2013 sales-tax revenue will see a decrease of about $125,000 from 2012, as my expectation is that the construction activity will be wrapped up,” Gregory said.

The new wastewater treatment system went online in September 2011 and the conveyance system and outfall will begin full operations this fall. Final restoration work at construction sites will continue through late 2013. The city has been gaining construction sales-tax revenue from the project, as one of the main access points for the project is in Kenmore.

Surrounding cities have seen dramatic increases in sales-tax revenue, according to state numbers. Kirkland’s retail-tax revenue increased by 19.74 percent, while retail trade increased by 14.61 percent. Lake Forest Park reported increases of 8.11 percent in retail and 13 percent in trade. Woodinville was a bit of anomaly with retail down 2.51 percent and trade up 3.66 percent. Redmond was up a modest 2.17 percent in retail and 2.36 in trade.


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