Jim Camden - Staff writer
The Spokesman Review

Spokane, WA - 3/29/02 - Money the city receives from sales taxes declined drastically in January, signalling problems for Spokane's 2002 budget.

"These are the worst numbers yet," City Administrator Jack Lynch said Thursday at a weekly news conference. "We need to reorganize our budget, which is not healthy."

Without a significant reversal, the city may face layoffs as a "last recourse" in its cost-cutting moves, Lynch said.

Total sales tax receipts for January, which are just now being received by cities and counties, were down 16 percent for the city of Spokane, or about $250,000, compared to January 2001.

While that amount represents a relatively small portion of the city's $119 million general fund budget, the trend has city officials worried. December sales tax revenues, which include the bulk of the Christmas shopping season, showed a slight rise of 1 percent compared to the previous year's December.

After increases of about 3.5 percent for November sales tax receipts, some city officials had begun to hope for a turnaround from declines seen in the weeks immediately after Sept. 11.

Sales tax is collected on a wide range of goods and services, including clothing, dining, furniture, wholesale goods, medical care and legal services. Reporting the totals a city or county receives back from the state takes about two months.

"At this point, they're pretty much all negative," Lynch said.

City officials planned a 2002 budget with a projected increase of 1 percent over last year's sales tax revenue. It seemed conservative at the time.

Collette Greenwood, director of the city's Office of Management and Budget, sent a strongly worded memo to City Council members this week with the bad news.

"I had expected some decrease for January but not to this extent," she wrote.

The sales tax is the largest source of revenue for the city, Greenwood noted.

"It's disastrous," said City Councilwoman Cherie Rodgers after studying Greenwood's figures.

The city collects sales tax on retail and wholesale sales, contractors and repairs, hotels and amusement ticket sales within its borders.

Clothing sales were among the worst in the retail category, off more than 24 percent from the previous January.

The unincorporated parts of the county, which would include the Spokane Valley and its mall, were down nearly 11 percent and some cities and counties saw a 25 percent drop.

"It's a statewide problem," she said.

Statewide, sales tax payments were down 13 percent in January, according to the Department of Revenue.