March 19, 2010 in City

County sales tax receipts up a tick

Increase might help avoid loan to cover payroll
By The Spokesman-Review
 

At a glance

Tax-increment financing diverts property taxes from local governments to provide public infrastructure in private developments. The goal is to stimulate the economy with mixed-use developments that increase future tax collections.

Spokane County commissioners got a small measure of financial cheer this week.

Chief Executive Officer Marshall Farnell reported that sales tax receipts are up slightly and that he may not need to borrow money to make payroll.

Farnell had warned in January that cash-flow problems might force him to borrow money to keep the county solvent until semiannual tax payments arrive May 1.

But Farnell said Tuesday that cash flowing through county coffers is up about $1 million from the same time a year ago, and he thinks a loan may be unnecessary.

“We’re going to kind of sweat this out between now and, probably, the end of April,” Farnell said.

The bright spots in Farnell’s report were overshadowed by his disclosure in January that property tax collections this year are expected to be $450,828 less than estimated because of budgeting errors.

Among other problems, county budgets have failed to allow for the diversion of property tax revenue to tax-increment financing districts since the first one was established in 2002, according to budget analyst Downs Paul.

In addition to this year’s failure to allow for TIF diversions, past failures contributed to a faulty starting point for 2010 revenue estimates.

Treasurer Skip Chilberg said five TIF districts are expected to divert $265,632 from the county general fund this year. Those include one at Liberty Lake that benefits a project involving Centennial Properties, a subsidiary of Cowles Co., which also owns The Spokesman-Review.

Chilberg said the budget mistake “really does make transparent the amount of money that’s being diverted from the revenue stream to a select few developers.”

Tax-increment financing diverts property taxes from local governments to provide public infrastructure in private developments. The goal is to stimulate the economy with mixed-use developments that increase future tax collections.

Chilberg said a West Plains TIF district for a hotel and restaurant development has been successful and will be closed out this year. But he said TIF is an “off-the-budget” expenditure of public money that “needs to be considered in the context of other government needs.”

Like the rise in sales tax receipts, the TIF-related reduction in estimated property tax is small in the context of a $135 million budget.

“Things like this don’t start showing up until you start looking for every penny,” Paul said.

Revenue estimates routinely fluctuate throughout the year, so discovery of the TIF error won’t have any immediate effect on expenditures.

Farnell’s report of higher-than-expected sales tax collections in January and February augured for an improving economy.

He told commissioners that, if sales tax revenue continues to come in at the same rate for the rest of the year, the county will collect $102,114 more than was budgeted.

Also, Farnell said, real estate excise tax collections are up “just a tick.”

Nevertheless, he “strongly” urged commissioners not to spend any of the county’s reserves this year.

Farnell noted the county has a $2 million balloon payment due in July on land purchased for the Geiger Spur project to relocate a railroad line that crossed Fairchild Air Force Base. The county bought 255 acres of light industrial land for $2.6 million in January 2008 and has about 205 acres left over.

If a real estate agent can’t sell surplus property in time to cover the payment, Farnell plans to borrow the money from the county treasury.

Further ahead, Farnell warned that the county general fund will lose an estimated $1.2 million in 2012 because of West Plains annexations by the cities of Spokane and Airway Heights.


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