Sales Tax Slide Outside Seattle, TriCities and Yakima

According to Washington CEO magazine in a Sunday posting on its website, state sales taxes showed a dramatic slow-down during the first quarter of 2008 and were a scant 1.4% higher than the first quarter of 2007.  That compares to collections which were 10.3% higher in the first quarters of 2005 and 2006.

King County, which accounts for 40% of the state's sales tax collections, showed a 5.5% growth during the first quarter of this year.  However, outside Seattle, Pierce (1.7%), Snohomish (2.3%) and Spokane (2.6%) all showed declines.   Insider King County, Dept. of Revenue numbers show it was a mixed bag.  Bellevue was up 1.3% and Redmond by 12.1%.  Kirkland was down by (13.7%).

The economic oasis in the state is in the farm belt which includes the TriCities and Yakima.  Franklin County reported collections up by 16.2%, Benton County up by 8.2% and Yakima was up by 7.2%.

CEO concludes: "Washington's economic growth has largely stalled; and state and local governments will have lots of belt-tightening to do during the next budget cycles."

We agree.  The worst approach to spurring job growth and the economy would be to increase state and local taxes and fees next year to "tax and spend our way back to prosperity."  If lawmakers, the governor and local leaders follow that path, it will be a long, long wait for good times to return.   

In addition to belt tightening, they need to do two additional things:

1. Look at the cumulative impact of all federal, state and local taxes and fees to see what it does to the private sector and its ability to create and retain jobs and businesses in Washington state; and,
2. Not impose additional new programs and their associated costs which will only add to the burden.  They need to look at people and businesses as hikers with an already heavy backpack and climbing a steep wilderness trail.  Even the slightest increase could stop the climb toward economic recovery and our ability to compete.

Hopefully, they will "Do the Math" carefully before they act.  Meanwhile, voters ought to look carefully at the candidates' plans to deal with the growing state and local revenue shortfalls. Voters need to ask the tough questions of candidates before they vote and those running for office would be wise to remember Bill Clinton's famous slogan:  "It's the ECONOMY......!"

Don C. Brunell, President (DonB@awb.org)