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Revenue from excise tax to fall $11 million short

January 31, 2007|by TARA REILLY

WASHINGTON COUNTY - Washington County expects revenue from the building excise tax to fall about $11 million short of what was anticipated for the current fiscal year.

The county thought the tax would generate nearly $15.6 million, according to the budget for fiscal year 2007, the current fiscal year.

A slowdown in the housing market and an increase in smaller homes being constructed is causing the shortfall, Budget and Finance Director Debra Murray told the County Commissioners at a meeting Tuesday.

The county plans to use $5.2 million from the fiscal year 2006 surplus toward the shortfall, and hopes to cover the rest with revenue from the current year's general fund, Murray said.

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"We're hoping it'll be there," Murray said.

Murray mentioned the shortfall during a discussion of the county's capital budget for fiscal year 2008, which begins July 1.

The excise tax is charged to building construction, and pays for capital projects such as school construction, roads and other services.

The tax is $13,000 per single-family home and $15,500 per multifamily dwelling unit, such as an apartment.

But for homes less than 1,500 square feet, the tax is $1 per square foot, much lower than the typical tax. The county is seeing an increase in the smaller units, contributing to the shortfall, Murray said.

Also, the housing market "dramatically slowed down," leading to fewer building permits being issued, she said. That equates to less money for the county to collect in excise tax revenue.

The county estimates it will issue 650 to 700 building permits for the year, Planning Director Michael Thompson said. That's significantly less than the 1,275 permits that the county had expected, Murray said.

The county anticipates the portion of the excise tax that goes toward school construction to come up $8.9 million short, and the portion for road projects to be $1.8 million short, which accounts for the majority of the $11 million shortfall.

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