Sales tax rebound aids cities, counties

Local governments are looking to consumers to keep spending their way out of what’s been a mild economic recovery.

From 2008 to 2010, consumers reined in retail purchases and the result, among other things, was a steep drop in retail sales tax revenue distributed by the state to local counties and cities.

In the past three years consumers are showing they have money to spend, but not at the levels they did prior to 2007.

The area’s city and county leaders say they hope 2014 shows the same or better retail rebound that they enjoyed during 2013. Among the biggest gains last year were those enjoyed by the City of Spokane Valley and Kootenai County.

Propelled by population growth, by more new jobs and by the migration of Washington residents buying lower-priced alcohol in Idaho, Kootenai County registered a 14 percent growth in taxable retail sales during 2013, according to the Idaho State Tax Commission.

Area economists, including Shaun O’L. Higgins, of The Oxalis Group, a Spokane consulting firm, regard population growth as one key factor explaining North Idaho’s retail recovery.

Higgins notes that since 2010, Kootenai County has grown 4.7 percent, compared to only 1.7 percent in Spokane County, according to U.S. census data.

Kootenai County’s 2013’s gains followed earlier retail sales bumps of 11.9 percent in 2011 and 2.3 percent in 2012.

The pace hasn’t fallen off so far this year. Based on January-February 2014 numbers, Kootenai County’s taxable retail sales are up 5 percent from the same period a year ago, said Idaho regional economist Alivia Metts.

Retail sales tax revenue in Spokane County – excluding the city of Spokane – grew by 6 percent in 2013, following basically flat growth in 2012, according to Washington’s Department of Revenue.

So far, based on the first two months of 2014, taxable sales in Spokane County are 4 percent ahead of a year ago, said chief budget officer Bob Wrigley.

The city of Spokane Valley saw an increase of 7.6 percent in total taxable retail sales during 2013, said the city’s finance director, Mark Calhoun. “That increase was pretty much all across the board,” he said.

Typically auto sales and other large-ticket items tend to boost the Valley’s sales totals.

Spokane Valley officials are projecting a modest 2.5 percent increase in retail taxes this year, Calhoun noted.

Spokane city officials had a 5.2 percent retail sales boost in 2012 and 5.1 percent last year, said city Chief Financial Officer Gavin Cooley.

So far, he’s projecting a 4 percent hike in total retail sales this year.

Inside the city this year, trade retail items — products like clothing or computers — are down 2 percent from a year ago, Cooley said.

“The thing about this recovery is that you would normally see double-digit increases coming out of a recession,” Cooley said. “We’re not seeing that. That’s not to say anything against Spokane. It’s just the kind of recovery we’re going through. It’s not one of those ‘normal’ recoveries,” he said.

Retail sales in Washington include retail trade items – cars, clothes, furnishings – as well as sales in industries like manufacturing and construction. Washington also charges sales tax on some services, but Idaho does not. Idaho, however, charges tax on food, while Washington doesn’t.

Last year, construction retail taxes accounted for 11 percent of the total in the city, Cooley added.