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October 30,2002 <br /> REVENUES <br /> General Trend: Revenues in Everett come largely through three <br /> sources:property tax(33%),sales tax(23%),and business&occupancy <br /> tax(12%).While it is not unusual for one of these income sources robe <br /> hit with a downturn for a year or two,we have always experienced a fairly <br /> quick recovery and subsequent return to growth. <br /> But we are now confronting a revenue picture where all three of <br /> these revenues are lagging at the same ewe,and a return to historical <br /> growth levels Is not anticipated.Let me be dear General government <br /> rev, <br /> rues are expected to show very Me growth for the next five years.In <br /> fact,we expect revenue increases to level out at the lowest overall growth <br /> rate we have experienced in the last 20 years.There are three key <br /> reasons for our diminished revenue expectations. <br /> Property Tax: Property taxes support all general government <br /> services,which include police,fire,streets,parks,and libraries.-Last year, <br /> the voters of Washington State passed Initiative 747,which limits annual <br /> property tax revenue growth to a maximum 01 1%plus adjustments for <br /> new construction and annexations.10 2003,we are forecasting lust 1% <br /> growth In the basic property tax.Because Everett's largest single source <br /> of revenue will no longer keep pace with inflation,the ability to sustain <br /> current levels of service in ail areas of the budget will be limited in future <br /> years. <br /> Sales Tax:Sales taxes represent the second largest source of City <br /> revenues.Fora variety of reasons,Including dot.com business failures. <br /> the rapid drop in the stock market,high rates of unemployment,a <br /> recessionary business climate,and the unparalleled events of September <br /> It,'Akan continue to have an affect,sales taxes show virtually no <br /> increase since 1999,a span of five budget years.We see no economic <br /> signals at this time that suggest a return to the historical growth pattems <br /> 01 5%or more.We note here that as of July 2002,unemployment in <br /> Snohomish County rose to 7.6%,up 65%In just one year.We are <br /> forecasting no more than 1%growth in the base sales tax for next year, <br /> plus a one-time collection from sales tax on construction.The actual <br /> collections will be monibared monthly and may be subject to revision In <br /> early 2003. <br /> 358 <br />