A fuzzy economic vision for West Plains

WEST PLAINS – Even under normal circumstances, municipal budget experts are cautious about their revenue projections — often preferencing statements with “We think” or “We hope.”

A global pandemic is certainly not a normal circumstance, leading budget writers on the West Plains to preface their statements with “We don’t really know yet” when asked about potential local fallout from a near shutdown of the various economies.

Airway Heights

City Manager Albert Tripp looks at potential impacts from the lens of the Great Recession. The first year of the economic downtown — 2008 — saw city revenues plummet 10 percent. Eventually that bottomed out around 15 percent as the recession continued over the next several years, but back then the city was facing lack of housing challenges.

Rapid growth over the last decade has changed that significantly. A 2018 Cheney Free Press story noted Airway Heights was the fastest growing city in Spokane County and fourth fastest in the state, with the population shooting up 7.4 percent in 2018 to 9,085.

The growth brought corresponding changes to the city’s coffers. The City Council approved a 2020 budget that began with a projected $5.78 million in taxes, of which $1.334 million are in property taxes and $2.478 million in retail sales and use taxes.

Tripp expects these revenues to dip, although how much might not be readily apparent. Spokane County Treasurer Michael Baumgartner extended the due date for paying the first half of property taxes from April 30 to June 15, and sales tax information usually lags about two months behind when the purchases were made due to state reporting requirements.

With many businesses shuttered, or operating with reduced hours or access beginning in late March, the impacts to sales and use taxes won’t be felt until as early as June. Property taxes should remain relatively consistent, but where an increase might be felt is in the amount the city isn’t able to collect due to possible foreclosures, budgeted in 2020 at $61,140.

Construction is another area of possible budget impacts. While low-risk residential construction has been allowed to resume recently, that applied to projects already permitted, and Airway Heights budgeted $180,000 in permits and $95,000 in building plan review fees for 2020.

The biggest impact might come via the loss of parks and recreation fees. The city’s new $14.2 million recreation center opened in May 2019, and had budgeted revenues in 2020 of just over $1.9 million — $1.8 million of which are membership fees, much of which has dried up.

In the end, Tripp thinks the impact to all of these revenue streams making up Airway Heights’ $11.34 million 2020 general fund budget could be between 15 – 20 percent.

“Let’s hope we’re wrong,” he said. “If we’re wrong, it means people’s lives are getting back to normal quickly.”

Cheney

City officials had projected general fund governmental revenues to be almost $14.82 million in 2020, a 13.5 percent increase over 2019 figures. Those projections are up in the air, although the potential exists they might not take as big a hit as their municipal neighbor to the north.

“Given the lag in our sales tax numbers from the county, we really won’t know the true impact of the stay at home order until the next couple of months,” City Administrator Marks Schuller said. “We also aren’t as sales tax rich as Airway Heights, so our impact may not be quite as bad as theirs.”

As of April 30, Cheney had received $613,496 in sales taxes, budgeted at $1.6 million for 2020 – just over $101,000 ahead of 2019 figures. As with Airway Heights, that amount was two months behind.

“We will see the first COVID impact with our May distribution (for March sales),” Finance Director Cindy Niemeier said.

According to figures released May 11, Cheney had received 36.92 percent, $935,902, of its budgeted $2.535 million in general property taxes — which includes the EMS levy. By contrast, the city received 47.45 percent, $1,117,947, in its first property tax disbursement in 2019, with Niemeier attributing the difference to Baumgartner’s extension.

Gas tax revenues, calculated on number of gallons sold, were about $3,00 ahead of 2019 as of April 30, coming in at $80,212. Niemeier said she expects this to drop given reduced travel associated with the state’s stay-at-home orders.

Utility charges such as water, sewer and garbage are also running a bit ahead of last year’s totals through April 30, although Niemeier said any effects of state restrictions are difficult to analyze given the different nature of collecting charges.

“The unpaid accounts receivable will be a better indicator at the end of the month to see how utilities are faring with unpaid bills,” she said. “I can tell you the late notices sent in April increased by approximately 7 percent.

Niemeier added this doesn’t necessarily mean bills are unpaid, but that people pay differently due to their own paycheck cycles.

Like Airway Heights, Cheney has been hit hard in the loss of parks and recreation fees and building permit revenues. The former stood at $113,133 through April 30, compared to 2019’s $168,867. Building permit revenues were at $23,616, compared to April 30, 2019’s total of $144,963.

“At this time, the majority of the permits have been for housing repairs and we have not received any new construction plans,” Public Works Director Todd Ableman said. “Not too sure what to expect as we reopen the construction world.”

While the picture is a mixture of good and bad, Schuller said they do expect to see impacts of the virus protection measures, and the city will response accordingly.

“We may not be proceeding with certain initiatives or projects, depending on the status of the budgets in our various funds,” he added.

Medical Lake

The city estimated $400,000 in sales tax, $579,000 in property tax and $146,633 in emergency medical service levy revenue for 2020. Unlike their neighboring West Plains communities, Medical Lake is more property-tax dependent, and will see some immediate impacts from the extension granted to property owners by Baumgartner.

“We always budget to withstand the first three months of the year without any significant revenue until the first property tax payments come in,” City Administrator Doug Ross said. “Now, we will have to find a way to survive the first six months.”

Ross said to fill the gap, the city would use money set aside for expenditures later in the year to cover operating costs until the first property tax disbursements are received. But even with the delay, Ross believes the city will still collect close to what it anticipated.

Medical Lake saw an increase in sales tax revenue in March over the previous year’s figures, and won’t know the damage done in April due to the business shutdowns just yet. And with less traffic on the roads due to stay-at-home orders, the city’s anticipated revenue from the gas tax is also likely going to take a hit.

“Potentially the most difficult for the city budget to overcome is the loss of gas tax revenue as less travel means less gas being purchased throughout the state,” Ross said.

Medical Lake budgeted $110,000 in gas tax revenue in 2020, and will need to cover any reduction by a transfer from the city’s general fund “which will ultimately reduce the city’s ending cash balance.”

With no activities taking place at parks and recreation facilities, Medical Lake’s budgeted $12,500 in parks and recreation program fees will also be hard hit.

“Parks and rec is a general fund revenue and will be compensated for by reduced spending in other areas of the general fund,” Ross added.

John McCallum can be reached at [email protected].