March 14, 2009
Coming to a town near you

With all the talk of fiscal difficulty at the federal and state levels, we're overdue for sustained discourse on inevitable difficulty facing local governments. Generally speaking, the smaller a government is, the less fat there is to trim without truly painful, visible cuts.

Example: Edmonds is facing some real hardship, spurred largely by the fact "'sales tax revenues have dropped 50 percent.'"

Each locality differs in their tax base, but its not hard to see towns around the state that rely on sales tax as a notable portion of their revenue are going to have to make some painful choices.

Posted by Eric Earling at March 14, 2009 06:33 PM | Email This
Comments
1. That article says:
"In the meantime, sales tax revenues have dropped 50 percent," Mayor Gary Haakenson said. "We can't just wait until November to wait to see if this levy is going to go through."

The city already cut its retail sales tax projections for 2009 to $4 million from $6 million. Now it is projecting $3 million in sales tax revenue.


It's possible to check the arithmetic when public officials and reporters get together to see whether what shows up in print seems to match what the state department of revenue shows for distributions of sales tax revenue.

For Edmonds through February of this year, compared to the same period last year, there appears to be a decline of 21 percent.

Through February 2009, it seems to be $872,752; and through February 2008 it seems to have been $1,102,871.

For all of last year, there appears to have been a total of $5,678,400; and for all of 2007 it was $6,117,085.

I say "seems" and "appears," because there is always a chance that I'm making some mistake when looking at the numbers; but I really don't see how there could be a 50 percent decline in the sales tax revenue for Edmonds, unless they think it will keep getting much worse as this year goes along.

I think the mayor means that he was hoping for $6,000,000 this year -- a small increase over the total for last year -- and now he fears that he will get a lot less this year compared to last year.

Posted by: Micajah on March 14, 2009 09:59 PM
2. Micajah....Your probably closer to the Truth then, the more pumped up crisis that the mayor is giving us. Governments want to grow. In order to grow they need more and more money. When Governments are forced to cut back, you better believe they will do so in the manner that will hurt the Tax Payers the most. They will close down schools, community pools, reduce vital services including, less police and fire protection. They want to use these things as a club to beat the Tax Payer into submission to where the Tax Payer will vote to allow levies to pass and taxes to be increased. The last thing they will reduce is the internal Fat, the proliferation of over staffing, overpay, over pensions and unnecessary number of departments when many of those departments can be combined. No, Governments will always grow beyond the True needs and will, in time, become more of a burden than a service. The Greatest Threat to the American people, during peacetime, is runaway Government that will steal your wallet and your Liberty.

Posted by: Daniel on March 15, 2009 12:35 AM
3. Says the man that doesn't have the stones to try it himself or provide a specific idea on how to make it better. The government is YOU and your neighbor....not a bogeyman THEM....at least at a local level.

Do something about it and quit your bellyaching!

Posted by: Matty on March 15, 2009 12:41 AM
4. Hey Matty....Your a total Liberal Fool. For you to buy into that CRAP that the Government is YOU and your neighbor. What a LAUGH! Government is suppose to be the employees
of the private Citizens. They are hired and elected to serve the people along with the Rule of Law, to protect the people from abuses, internal and external. However, as with most Governments, they will begin to serve themselves more than they serve the people and that's the Crux of an age old problem. What has just been written, probably doesn't make any sense to you. That is not a surprise....Your a Liberal IDIOT!

Posted by: Daniel on March 15, 2009 01:03 AM
5. As a part-time resident of Edmonds, Haakenson is my mayor when I'm in the US. I've talked to him several times, and he's no fool - he's a solid businessman. And I'm sure he's talking about projected income, not actual income.

See, unlike the Governor, Haakenson tends to be pro-active about problems, not denying their existence until it all blows up.

I'd rather the local Government adjust now to potential problems than wait until it's all falling apart. Solutions tend to be simpler, better thought out, and better implemented when you take action early.

The idiots running Olympia could learn a thing or two by watching what Haakenson is doing...

Posted by: Shanghai Dan on March 15, 2009 01:54 AM
6. This is why I say that the whole Obama lie is predicated on tax revenue that doesn't exist. We need to shrink bureacracy, not grow it. Fortunately, local governents can't print money like Geithner will.

Posted by: Jeff B. on March 15, 2009 05:15 AM
7. The state Dept of Rev report shows that 29.5% of Edmonds' sales tax base in 2007 was from new and used cars. Another 17.5% came from construction. I didn't look up their realty excise tax but that's dropped all over the state, down about 50% so far this year over last year.

Could it be that if they were spending 47% of their sales tax on roads and other infrastructure capital projects instead of employees, they wouldn't be laying people off? When the "growth caused" income slows, it also means that you don't have to build for new infrastructure.

Posted by: Gary in Olympia on March 15, 2009 07:29 AM
8. I recall the public employees union negotiating a 6% across the board raise last year in Edmonds. The mayor may have been backed into a corner (I don't know how these contracts are set up). HOWEVER I find it interesting that the concept of "rolling back" some of the unionized municipal workforce pay and benefits has not come up at the local level from either the city or unuon side.

This local funding problem is mostly a local expense problem, caused by high labor and benefit costs. These labor expenses should be looked at as a "throwback remnant from better days" and should NOT be the sacred cow that they are. Significant cuts, or breaking the union, should be on the table. That is the only way out of this. The cities can no longer afford to provide basic services when they have to spend so much on personnel.

Posted by: anti public union on March 15, 2009 09:49 AM
9. What we need is vast new public works programs in Edmonds. They can just print the money, whoops, they're not the federal government!

Posted by: Crusader on March 15, 2009 12:07 PM
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