When Pandemic Hit, County Braced for Recession-era Finances; the Opposite Occurred

Posted July 6, 2021 at 5:30 am by

Negative Lodging Tax Funds in 2020, to the Best Year in Land Bank History in 2021

By F. Milene Hen­ley, San Juan Coun­ty Auditor

Milene Henley. Contributed.

I have always been amazed by four-way stops. Dri­vers learn as teens to nego­ti­ate these tricky, coop­er­a­tive inter­sec­tions, and most of us nev­er for­get. It’s a mar­vel of social engineering.

This past year has been one giant exper­i­ment in social engi­neer­ing. We all had to learn to behave in ways that were not nat­ur­al but were nec­es­sary to get us all through this painful intersection.

Because of the coop­er­a­tion and care shown by res­i­dents of San Juan Coun­ty, San Juan Coun­ty had the low­est rate of COVID cas­es in the state and so far (knock on wood), no deaths.

Finan­cial­ly, San Juan Coun­ty, like all of Wash­ing­ton state, was dealt a blow last March when busi­ness­es were closed and peo­ple told to stay home. Sales tax plummeted.

The Coun­ty Health Officer’s order to close accom­mo­da­tions dealt a fur­ther blow. In June, the coun­ty had its first month ever in which lodg­ing tax – a com­po­nent of sales tax – was neg­a­tive, because of refunds.

Based on the last reces­sion, the coun­ty pre­pared for the worst: reduced sales tax, slowed build­ing activ­i­ty, decreased real estate sales, reduc­tions in oth­er econ­o­my-dri­ven revenues.

That’s not what happened.

As soon as accom­mo­da­tions re-opened in mid-June, the econ­o­my began to pick up.

Cooped-up fam­i­lies found that they could trav­el to the San Juans, enjoy the out­doors, and still keep their dis­tance from oth­ers. Sec­ond-home own­ers moved to their island homes, to work and school remote­ly, in the rel­a­tive qui­et and safe­ty of the islands.

Their pres­ence showed in unex­pect­ed ways – sol­id waste rev­enue, for exam­ple, dou­bled com­pared to the pre­vi­ous year. This change is in sharp con­trast to what hap­pened dur­ing the last reces­sion when sol­id waste rev­enue decreased.

The new inter­est in remote liv­ing showed itself in oth­er ways, as well. Rather than dip­ping, real estate sales soared, giv­ing the Land Bank its best year ever. Build­ing per­mit rev­enue exceed­ed not just bud­get, but also all pre­vi­ous years.

In addi­tion, the Coro­n­avirus Aid, Relief, and Eco­nom­ic Secu­ri­ty, or CARES, Act poured hun­dreds of thou­sands of dol­lars into the coun­ty to man­age the response to the pan­dem­ic. Between grant rev­enue and high­er-than-bud­get­ed build­ing rev­enue, the County’s gen­er­al fund rev­enue for 2020 end­ed high­er than bud­get, despite a decline in sales tax revenue.

In 2021, the upward trend con­tin­ues. Total first-quar­ter gen­er­al fund rev­enues far exceed­ed all pre­vi­ous years. First-quar­ter sales tax rev­enue exceed­ed past years and all expec­ta­tions. Build­ing con­tin­ues strong, and real estate sales are lim­it­ed only by inven­to­ry. Although we do not yet have final data for the sec­ond quar­ter, these upward trends are clear­ing con­tin­u­ing. Only inter­est lags expectation.

One of the big ques­tions fac­ing the coun­ty now is how to spend the $3.4 mil­lion (spread over three years) that the coun­ty will receive from the Amer­i­can Res­cue Plan Act. Some addi­tion­al pro­tec­tive mea­sures, such as those imple­ment­ed with CARES funds, are already budgeted.

Atten­tion to the county’s phys­i­cal plant is need­ed. A plan to con­sol­i­date cus­tomer ser­vice activ­i­ties in order to improve pub­lic access to ser­vices is being dis­cussed. More pos­si­bil­i­ties are being considered.

Although San Juan Coun­ty and many of its eco­nom­ic sec­tors are thriv­ing, the COVID-induced reces­sion did not hit all sec­tors equal­ly. Many busi­ness­es, par­tic­u­lar­ly restau­rants and enter­tain­ment venues, are still suf­fer­ing from the loss­es of last year. Oth­ers are strug­gling to find staff to re-open. Until in-per­son school resumes in the fall, many per­sons for­mer­ly in the work­place – par­tic­u­lar­ly women – are find­ing it nec­es­sary to stay home with chil­dren rather than return to work.

As the recov­ery con­tin­ues, our coop­er­a­tion is still need­ed. Busi­ness­es still need our sup­port. Some places still require masks. It was our coop­er­a­tion that got us safe­ly through the past year. If we can suc­cess­ful­ly nav­i­gate this, maybe we can learn to nav­i­gate round­abouts as well as we do four-way stops.

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3 comments...

  1. I feel one of the biggest con­trib­u­tors to the health of sales tax rev­enue was that peo­ple ordered and had deliv­ered many items they would oth­er­wise buy off-island. Since we are a des­ti­na­tion sales tax state, that tax mon­ey came here instead of stay­ing in Burling­ton or Anacortes.

    Comment by Adam Eltinge on July 6, 2021 at 9:05 am
  2. Thanks Milene! What about the SJC Home Fund? Can more resources from the Amer­i­can Res­cue Plan be allo­cat­ed towards this crit­i­cal issue in the islands?

    Comment by Darcie Nielsen on July 6, 2021 at 9:32 am
  3. Well done Milene !! Look­ing for­ward to our recov­ery this year.

    Steve Hushe­beck

    Comment by Steve Hushebeck on July 7, 2021 at 5:06 pm

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