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City increases sales tax projection
POULSBO Even though the doors have yet to swing open at Wal-Mart and The Home Depot, city officials have quintupled their revenue projections for the upcoming year.
Initially, Finance Director Nanci Lien had estimated a $100,000 increase in sales tax revenue for the 2006 preliminary budget, but Councilman Ed Stern asked her to examine those numbers again to give a more accurate projection.
Lien reported back to the councils finance/administration committee with that revision Nov. 2.
My sense is to recommend that the council adopt a number of $500,000 for the sales tax revenue increase, Stern said.
The state auditor expects the city to realistically forecast revenue projections to provide a clear picture of the citys financial status, he said, noting that the $100,000 increase was unrealistically low.
We did our homework and tried to anticipate it within a realistic number, and I think even this is too low, he said.
Other cities have had a Wal-Mart and The Home Depot open during the same fiscal year, but none have had a Super Wal-Mart, like the one being built at Olhava, and a Home Depot open in that time frame, Stern said.
The recommended $100,000 increase in revenue was based on the citys standing policy not to forecast more sales tax revenue than it received the previous year, Lien said.
Weve been pretty accurate in the past, and its very conservative to think we will see a $100,000 increase next year, she agreed.
However, after talking to other cities in similar situations and Wal-Mart executives, Lien said she would go along with the $500,000 increase recommended by Stern.
As the city prepares for the initial effects of commercial activity in Olhava and a general increase in economic activity throughout the city, its property tax rate is decreasing.
The assessed property tax per $1,000 of assessed valuation in 2005 was $1.93. In 2006, that rate is expected to drop to $1.71 per $1,000 of assessed value, said Budget Analyst Deb Booher.
As values go up, some of you will actually recognize a reduction in City of Poulsbo taxes, Booher said.
For example, the taxes on a house with an assessed value of $200,000 in 2005 would have been $386. If the value remains the same in 2006, the taxes will be $342, which is a reduction of $44 or 11 percent.
However, if the value of that home increases by 10 percent to $220,000, the taxes in 2006 would be $376, which is still less than the taxes paid in 2005.
An increase of 14 percent or more in the assessed value of a $200,000 house would result in an increase in property taxes, even though the tax rate was reduced from its 2005 level.