Pullman-area construction has pulled the city out of a financial slump.This is good news and it proves how vital continuing development is to our city. However, Troy Woo is correct. Construction is highly cyclical. We cannot afford to live one project to another. We need a more steady and reliable source of revenie, and that can only be accomplished by increasing our sales tax base, and right now, that means getting our Wal-Mart.
Preliminary year-end financial reports were favorable for the city, mostly due to sales, property and utility taxes that provided for more than $8 million of the city's $13.3 million 2006 revenue, Pullman Finance Director Troy Woo said. Combined utility, sales and property taxes increased more than 30 percent from 2005.
Aggressive money management and increased interest account for additional revenue. Building permit revenue dropped 13 percent from 2005, when similar revenues were at an all-time high.
Woo said he is pleased with the outcome.
"It was very positive. We're in a more favorable position than we thought we would be," he said. "Our three major taxes have been impacted, or will be, because of the high level of construction."
Figures are preliminary, Woo said and adjustments will be made to estimates in preparation for the 2006 financial statements and audit.
The city exceeded its goal to maintain 13 percent of the yearly operating budget as savings, and will settle at about 14.3 percent.
Mayor Glenn Johnson said he's comforted to know the reserve is available for emergencies, but noted that saving is just good practice.
"It makes sound public sense to have that money to take care of things that are unforeseen," he said.
The city's reserve currently amounts to $3.2 million, or 22.9 percent of the operating budget, which could allow funding for projects identified during the 2007 budget process. The 2007 budget was balanced with a deficit of almost $833,000 to ensure cash reserves don't drop below 13 percent.
The additional money can go to fund projects addressed, but not funded in the 2007 budget process, Woo said. Some money has been earmarked for many of the projects, which include repairs to the heating and air conditioning system at the Pioneer Center and exterior wall painting and maintenance at the Pullman Aquatic Center. Also included are electrical and air conditioning improvements for the city's phone and computer network room and funding to demolish buildings to make way for the Grand Avenue Greenway project.
City Councilman Keith Bloom said maintaining the reserves should be a priority, and additional projects should be tackled if money allows.
"We shouldn't be in the red at the end of the year," he said. "Not only can we fill up the reserves, but we can also march right down those list of projects. That's the best of both worlds. But my position is that we need to maintain our reserves. The reserves come first."
Woo said providing more savings is an option.
"That certainly can be an option to save some," he said. "It could be used to help with the 2008 budget."
Woo cautions the council not to get too hopeful, as the banner financial year of 2006 isn't likely to be repeated on a regular basis. The WSU Compton Union Building's $86 million renovation - the highest valued taxable construction project in Pullman's history - may be hard to beat, at least for a while. Further university projects, such as the new 18-hole golf course and improvements to Martin Stadium, also have added to city revenue. The city will incur more cost increases as medical insurance premiums for employees - which are paid out of the city budget - are likely to increase by 8 percent in the next year.
"I would certainly welcome WSU having projects like that every year, but I don't think we can count on it," Woo said. "I stress caution as we move forward."
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