There will be more money for Clark County’s small communities, if their first-quarter projections hold steady.
After years of declining taxes and fees, due in part to the Great Recession, small cities are finding a modicum of relief. And it’s coming from sources of income that haven’t been strong in years. From a mini building boom in La Center to land deals brokered in Battle Ground, cities have started 2013 on solid financial footing.
But can it last? That’s the question at the center of the cities’ first-quarter financial reports.
Some of the biggest revenue increases have come from city fees that haven’t traditionally made up large pots of the cities’ budgets.
In La Center, charges for services, $9,781 in the first quarter, are up 482 percent. The uptick can be attributed to a boom in building activity, mainly from the construction of single-family homes, that may not continue, Finance Director Suzanne Levis said.
Collection of sales tax is also up by 13 percent compared with what the city budgeted, an increase of $5,559. If the trend continues, the city will receive an extra $27,000.
Upward-climbing revenue represents a positive sign that the economy is turning around, Levis said, but there’s no guarantee it will last.
“I’m horribly conservative,” she said. “Revenue is up, but it’s not up a huge amount.”
For instance: The city’s gambling revenue, which La Center collects from its four cardrooms, has generated $773,592 in the first quarter, slightly less than the city anticipated. That money also comes before the summer months, traditionally a slow time for the cardrooms.
Elsewhere, city revenue has seen moderate boosts. First-quarter revenue in Battle Ground is $1.76 million, up from $1.59 million in the same period in 2012.
The city’s two biggest bumps in real estate excise taxes come from two large land deals.
Ray Bartlett, a financial consultant, said building development is only one step on the road to recovery.
“It’s not enough to just build houses. They have to be sold and marketed,” Bartlett said. “So the next step will be issuing occupancy permits and lowering vacancy rates.”
He said more people are taking advantage of historically low interest rates. But, he added, construction activity is difficult to predict.
In Camas, construction has been on the decline in recent months, leading to plateauing sales tax revenue.
“Most of our sales tax in the city of Camas is based on construction,” Camas’ Finance Director Joan Durgin said. “We don’t have a lot of retail here. During the winter, we have very little construction going on.”
Meanwhile, there’s mainly good news in Ridgefield’s first-quarter report.
Collection of the retail sales tax is up nearly 50 percent over 2012 figures — with $221,490 collected so far in 2013 — and licenses and permits are up by 158 percent.
Washougal hasn’t completed its first-quarter report yet, but Mayor Sean Guard said sales and tourism taxes are up. He attributes that to the “gentle recovery” of the economy.
Cities will have a clearer picture of what their revenue will look like when property tax collections pick up later in the year. Property taxes represent the largest chunk of a city’s budget.
Until then, Levis said, cities should hold on to any extra revenue they get.
“Just because revenue is up,” she said, “it doesn’t mean we can gleefully spend money.”