County Finance Update: Getting Out of the Pandemic

by F. Milene Henley

San Juan County Auditor

I have always been amazed by the four-way stops. Drivers learn to negotiate these difficult, cooperative intersections as teenagers, and most of us never forget. It is a marvel of social engineering.

The past year has been a giant experiment in social engineering. We all had to learn to behave in ways that were unnatural but needed to get us through this painful intersection. Due to the cooperation and care of residents of San Juan County, our county had the lowest COVID case rate in the state and so far (I’m touching wood), no deaths.

Financially, San Juan County, like all of Washington state, took a hard hit last March when businesses were shut down and people were told to stay home. The sales tax has fallen. The county health officer’s order to shut down the housing was yet another blow. In June, the county experienced its first month in which the lodging tax – a component of sales tax – was negative, due to refunds.

Based on the latest recession, the county braced for the worst: a reduced sales tax slowed construction activity, decreased real estate sales, cuts in other economic income. This is not what happened. As soon as accommodation reopened in mid-June, the economy began to recover. The reunited families found that they could get to the San Juan, enjoy the outdoors while keeping their distance from others. Owners of second homes have moved to their island homes, to work and study remotely, in the relative peace and safety of the islands. Their presence manifested itself in unexpected ways – solid waste revenues, for example, doubled from the previous year. This change is in stark contrast to what happened during the last recession when solid waste revenues declined.

The new interest in remote living has manifested itself in other ways as well. Rather than plunge, real estate sales soared, giving Land Bank its best year ever. Revenues from building permits exceeded not only budget, but also all previous years.

Additionally, the Coronavirus Aid, Relief, and Economic Security Act has poured hundreds of thousands of dollars into the county to manage the pandemic response. Between grant revenue and building revenue above budget, county general fund revenue for 2020 was above budget, despite a decline in sales tax revenue.

In 2021, the upward trend continues. Total general fund revenues for the first quarter far exceeded any of the previous years. First quarter sales tax revenue exceeded previous years and exceeded all expectations. Construction continues to be 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 clearly continue. Only interest lags behind expectations.

One of the big questions the county faces now is how to spend the $ 3.4 million (spread over three years) it will receive from the American Rescue Plan Act. Some additional protection measures, such as those implemented with CARES funds, are already budgeted for. Special attention to the county’s physical plant is necessary. A plan to consolidate customer service activities to improve public access to services is under discussion. Other possibilities are being considered.

While San Juan County and many of its economic sectors are thriving, the COVID-induced recession has not affected all sectors equally. Many businesses, especially restaurants and entertainment venues, are still suffering from losses from last year. Others are struggling to find staff to reopen. Until in-person classes resumed in the fall, many people who previously worked – especially women – found it necessary to stay home with the kids 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 allowed us to cross safely last year. If we can navigate successfully we may be able to learn to navigate roundabouts as well as make four lane stops.

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