Sequim: Best year in the books

Last year, the City of Sequim saw its biggest sales tax revenues ever.

City staff recently revealed the city brought in 9 percent more in sales taxes than budgeted at $2,572,497 total. That’s $211,855 more than 2014 and continues a three-year upward trend for the city after decreases from 2011-2012. It’s also nearly double Sequim’s 2004 total ($1,319,954) when the city began seeing an increase in big box retailers developing and moving into city limits.

But what does an increase mean for city residents?

Sue Hagener, administrative services director, said when sales tax revenues are more than projected the excess is typically saved for future reserves or other priorities.

She said they look at revenues as a whole with other finances with the goal for a “healthy ending fund balance” between $1.4 million-$2.2 million as stated in the city’s guidelines. Currently, the city’s ending fund balance is at $1.8 million.

If the city has additional savings, city councilors could delegate some funds to unexpected opportunities such as in March 2013 when they voted to purchase the former Gull lot at the corner of Washington Street and Sequim Avenue, 104 W. Washington St. It was later renamed Centennial Plaza.

Hagener said there are no plans for the excess funds from 2015 as of yet but there are a number of practical options — save the money, pay off debt and/or apply it to equipment reserves, such as street vehicles, police vehicles and IT equipment.

Sequim’s Deputy Administrative Services Director Connie Anderson said the city went through a review process a few years ago of its fleet and equipment, measuring all of the specifics and creating a replacement schedule.

“We’ve actually been doing something less than that schedule,” Anderson said. “Our goal is to get it back to the right levels.”

“In 2016, funding is much more aggressive,” Hagener said.

“Operations are returning to normal following the completion of the Civic Center.”

In February, city councilors approved up to $100,000 from equipment reserve funds for two new police vehicles to replace older Ford Crown Victorias with 2016 Ford Interceptors and extra police equipment.

They also approved purchasing a Ford F550 4WD truck on March 14 with additional equipment for snow/ice removal for about $89,000.

Sequim Public Works staff estimate its equipment replacement in 2017 would cost about $411,000, $175,000 in 2018 and $361,500 in 2019.

So why the bump?

Hagener said 2015’s sales tax revenue increase may partially be an indication of what’s happening in the construction market.

Within city limits, construction totals continued a three-year upward trend going from $142,777 in 2013 to $209,030 last year. However, last year’s tax totals from construction most recently compare to 2010 ($217,676) which came in year four of a six-year downward trend following an all-time high in 2006 ($608,061).

Hagener said the city also saw a “huge bump” in new residential construction permits last year.

In 2015, potential builders filed 62 construction permits in the city with 60 of those residential and two commercial, whereas in 2014, the city saw 34 filed (33 residential, one commercial).

New remodeling permits also went up from 196 to 208.

Along with construction sales tax totals, accommodations and food services went up by more than $25,000 and retail by nearly $103,300.

Hagener said retail increases may be “a reflection of the percolating economy.”

“People are just feeling more comfortable,” she said.

Another reason for a sales tax bump, city staff said, was the 0.2 percent sales tax holiday from Clallam County that went into effect in July 2015 and will sunset April 1.

Anderson said that the city saw nearly $32,000 more because of the tax break last year.

Since 1997, the city’s sales tax has risen by 0.8 percent and is currently at 8.7 percent sales tax with 0.85 percent going to the city, 0.2 percent to the Sequim Transportation Benefit District and 0.085 percent to the Sequim Public Safety Tax.

Hagener said the city doesn’t have any new general facility tax or impact fees in place but going into 2015, fees in the city, such as permits, were increased by 2.5 percent for service-related charges to people for staff time.

City of Sequim revenue, 2004 to 2015

Year Total sales tax Construction Retail Accomm./food

2015 $2,572,497 $209,030 $1.62 million $330,682

2014 $2,360,642 $154,637 $1.52 million $305,573

2013 $2,278,743 $142,777 $1.5 million $296,390

2012 $2,180,508 $139,557 $1.43 million $272,504

2011 $2,311,882 $181,805 $1.44 million $254,626

2010 $2,322,939 $217,676 $1.5 million $253,484

2009 $2,229,439 $251,566 $1.4 million $230,702

2008 $2,472,055 $360,063 $1.5 million $262,720

2007 $2,348,937 $464,738 $1.4 million $248,590

2006 $2,207,586 $608,061 $1.1 million $212,845