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City budgeting cautiously but thinking positively

Port Orchard’s mayor and city council trimmed $60,000 off the staff’s retail sales tax estimate for 2011, bringing their sales tax budget for next year to about the amount collected in 2010.

Last year, they budgeted $2.74 million from sales tax receipts and received $2.77 million.

This year, staff estimated that the city would bring in $2.8 million from the tax, but the city council reduced it to about $2.77 million, like last year.

“Unless there’s a shock to the economy, we would expect things to stay pretty stable here,” said City Treasurer Allan Martin.

“The city council considers that a lot of the local spending is non-discretionary,” he said. “It’s people buying necessities, and that would bode for a stable economy.”

The large number of government employees living here could also contribute to the area’s economic stability, Martin said.

Elizabeth Scott, a Kitsap County regional labor economist for Washington State’s Employment Security Department, agreed.

“Anytime you have jobs where there’s a lower turnover, that creates stability for the economy,” she said. “When it comes to full-time, permanent jobs, you typically see people staying there longer.”

Also, public-sector jobs vary less than private-sector jobs, Scott said.

“A lot of time those require a high amount of training and can be more dangerous,” she said. “There’s not as many lower-skill jobs in government.”

And jobs that require a higher skill level typically pay more.

Private-sector employers, like Port Orchard’s retailers on Bay Street, for example, have felt the effects of the unstable economy more keenly than government employees.

“A lot of businesses have closed,” said Coreen Johnson, executive director at the Port Orchard Chamber of Commerce.

Consequently, she added, chamber membership is down slightly compared with last year.

“We didn’t take a big hit,” she said. “We’re down about 14 members.”

Statistically, though, new businesses have cropped up to take the place of the old ones.

Port Orchard issued 42 business licenses by November 2010 and 28 by November 2009.

Neighboring cities didn’t reflect that pattern.

Bremerton, for example, issued 44 business licenses by November 2009 and 274 by November 2010.

But business license issues went in the opposite direction for the city of Bainbridge Island, which issued 21 licenses by November 2009 and 15 by November 2010.

Business license issue trends in Poulsbo most closely resembled patterns in Port Orchard.

The city issued 17 business licenses by November 2009 and 22 the next year.

But no commercial building permits were issued in Port Orchard and many neighboring cities in either 2009 or 2010.

Bainbridge Island, Paulsbo and unincorporated Kitsap County issued no commercial building permits during that time either.

Five were issued in Bremerton.

However, Martin added, the city council’s budget has prepared Port Orchard for success if the economy picks up.

“The city council this year is fairly progressive,” he said. “If the economy turns around, the city will be well-positioned by that.”

“I think everyone should look optimistically and conservatively toward the future,” said Johnson. “One reason why the city of Port Orchard is in good shape is because (the city council has) been careful. But my personal opinion is that things will start turning around.”

And Washington State’s Economic and Revenue Forecast Council concurs.

“(Washington’s) economy is off life-support, but still in intensive care,” according to the Council’s November Revenue Review Notebook. “The immense damage from the Great Recession continues to linger, although that recession is now officially over. Consumer and business confidence, financial and regulatory institutions, household and corporate balance sheets, the economy and economic forecasting models-none escaped unscathed.”

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