The amount of tax revenue Snohomish County expects to collect from real estate sales this year is likely to fall about $2.6 million below predictions, a consequence of the troubled housing market.
That brings those revenues down to mid-1990s levels.
The shortfall could delay some small
park improvements and projects to manage water runoff. That includes upgrades to Wenberg County Park on Lake Goodwin and various efforts to restore wildlife habitat. The nosedive in this source of revenues should have no effect on the county day-to-day operating budget.
“It’s going to be tight here, we’re going to be watching things very closely,” county finance director Roger Neumaier told the County Council last week.
Neumaier added that he didn’t expect things to get worse because, “we’re pretty much grinding along the bottom.”
The latest dose of gloomy news comes during Snohomish County’s third consecutive year of bare budgets. It’s also at a time when department heads are starting to think about next year’s budget, ahead of the more public process the County Council and county executive conduct each fall. A June report from the county finance department shows revenues only slightly below projected numbers for the county’s operating budget.
Tax revenue directly tied to real-estate sales, however, has dropped by almost a third.
The county collects a tax of one-half of 1 percent on all real estate sales in unincorporated areas. It’s separate from the 1.28 percent real estate excise tax the state collects for its general fund. Almost all Snohomish County cities impose the same one-half of 1 percent real estate excise tax for their areas. The exception is Darrington, where the rate is 0.25 percent.
For this year, the county had expected to collect a bit less-than $9 million in these taxes. Instead, the county finance department has revised that to $6.2 million.
Compare that to 2007, when the county’s year-end take from the real-estate sales tax was about $26 million.
The money is restricted, so it can’t be used for operations. Snohomish County had been using some of it to pay debt, most notably for the county jail building. The county can’t easily defer those costs.
Instead, county leaders plan to delay or switch funding sources for a number of park and surface-water-management projects. So $350,000 for the Smith Island salmon-habitat restoration –which carries a total price tag of more than $10 million– will be pushed back.
The county also plans to delay more than $500,000 in upgrades to Wenberg County Park, which it took over from the state two years ago. While previously planned trail improvements won’t happen anytime soon, county parks officials do expect to complete $100,000 in work to make Wenberg’s campground restrooms more accessible to disabled people, in accordance with federal law.
“There’s nothing that’s going to cause the park to shut down,” said Councilman John Koster, whose district includes Wenberg.
The drop in real estate excise tax is a symptom of the wider housing malaise. The county’s portion of the tax also has shrunk from cities annexing more unincorporated land.
The state Department of Revenue recorded 20,703 taxable real estate sales in Snohomish County last year. That’s a 43 percent drop from the peak number of sales in 2006. It’s also a 20 percent drop from 2000, despite the county growing by more than 100,000 people.
Snohomish County followed a similar path as the state in overall numbers for taxable real estate sales.
Recently, the local real-estate market had been showing signs of life.
Home sales rose by 17 percent in July compared to July 2010, the Northwest Multiple Listing Service reported last week. The number of pending sales that month rose 39 percent compared to a year earlier. On the other hand, the combined median price of homes and condos dropped to $225,000, 16.7 lower than a year earlier and on par with November 2004 prices.
Noah Haglund: 425-339-3465, nhaglund@heraldnet.com.
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