(The Center Square) – The city of Oak Harbor had the sixth-largest increase in sales tax revenue last year among Washington municipalities, according to a new report from the Office of the Washington State Auditor.
Oak Harbor’s sales tax collection was up more than $1 million from the year before, from $4.5 million to $5.6 million; a 23.5% increase.
“Higher sales tax receipts are a good indication of economic growth,” University of Central Arkansas economist Jeremy Horpedahl said.
There are some exceptions to that, however, including the federal government’s large “injection of cash to consumers outside of economic growth,” Horpedahl said.
Overall sales tax collection in Washington was down 4.5% last year, for a $76.7 million decline. The auditor’s office, however, reported that “167 of 272 cities (that's over 60%) saw an increase in their sales tax collections over pre-pandemic 2019.”
“We think each city has its own story that explains the increase or decrease," the report said. "We shouldn’t assume any one factor is responsible for changes.”
Oak Harbor Mayor Mayor Bob Severns said the main reason for a “year-over-year increase in sales tax is due to the passage of the Transportation Benefit District,” which he explained is “a voter-approved 0.2% sales tax for road projects” that took effect April 1, 2020.
Severns also said the local Naval Air Station plays a huge part in the city’s economic activity.
“The resilience and ability of Oak Harbor's business community to adapt and ongoing partnership with Naval Air Station Whidbey Island accounts for the other factors that make our City's economy more robust in the face of the COVID-19 recession,” Severns said.
Eric Marshall, publisher of the Whidbey Weekly, thinks other factors contributed to the increase in sales tax collections as well.
“I would venture to guess that a portion of the boost is associated to hardware/home improvement sales,” he said. “With so many people being forced to isolate at home last year they had the time and/or motivation to get home projects done.”
Marshall also believes the buy local movement made a difference.
“The residents of our island rallied around our local businesses and made a concerted effort to support them during the toughest time of the pandemic,” he said.