Though the sub-prime mortgage crisis hasn’t hit Washington as hard as other parts of the country, local governments are feeling some pain as the real estate market slows.
Decreased revenue from the Real Estate Excise Tax, or REET, has forced the city of North Bend to delay plans to improve Pickett Avenue between Sixth and Eighth streets, and may affect other capital projects, City Administrator Duncan Wilson told the Valley Record.
Between January and March of 2007, North Bend collected more than $60,000 in REET funds. During the same period this year, revenues were less than half that amount.
“You don’t want to be caught spending money where you don’t have the revenue coming in behind it, so we’re trying to be careful,” Wilson said.
If the market rebounds during 2008, REET-funded projects like street and utilities improvements will get back on track. If not, city officials will have to decide whether to shelve projects or look for alternative ways to pay for them. They can divert money from the city’s general fund, or borrow money in hopes that the revenue stream will improve.
“There will eventually be a market again. We just don’t know how long that is, and you really can’t bank on it,” Wilson said. “We’re going to have to make some tough choices.”
REET funding decreases likely won’t affect Snoqualmie’s capital projects, said Harry Oestreich, the city’s finance officer.
“It’s been predicted because of the changes in the number of houses constructed on Snoqualmie Ridge,” Oestrich said.
The city has seen a slowdown in REET revenue since building in the area peaked in 2004, and has budgeted accordingly.
“We have been very conservative in spending that money and utilizing it for capital projects,” Oestrich said. “We’re anticipating using most of what we’ve saved for the new City Hall, and that project is on track.”