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Oak Harbor posts strong tax figures

A statewide list of cities shows declining sales tax revenues everywhere except for Oak Harbor, which sticks out like a healthy thumb.

Of about 50 cities listed by the Department of Revenue, only Oak Harbor is in positive territory in a significant way.

But it appears that the latest taxable retail sales for Oak Harbor are deceptively positive. Island County is down 8.9 percent, but Oak Harbor’s third quarter taxable retail sales were up 4.3 percent in comparison to the same time period last year, according to the State Department of Revenue.

Why?

There’s an easy explanation, said City Finance Director Doug Merriman.

“It’s an artificial inflation,” he said, citing a bookkeeping error and one-time revenue from the high school construction project.

First off, material purchases for high school construction substantially bumped up taxable retail sales. Secondly, an error by the Department of Revenue that surfaced last August was corrected, resulting in a $454,000 third quarter payment to the city instead of the usual $260,000, Merriman said.

Adjust for the mistake and Oak Harbor’s third quarter retail sales are still up 4 percent. Subtract all contributions from the high school construction project, and that figure dips into negative territory, minus 4 percent.

“Retail sales are actually down,” Merriman said.

Even so, Oak Harbor is still in relatively good shape compared to sales tax receipts elsewhere, according to Department of Revenue figures released this week for the third quarter of 2009.

Nearby Mount Vernon is at minus 10.5 percent, Bellingham minus 8.7 percent and Port Townsend minus 5.3 percent in comparison to the third quarter of 2008. Statewide, such revenues are down more than 6 percent.

Oak Harbor hasn’t had the reliance on car dealerships like those communities along the I-5 corridor, Merriman said, adding that the Navy also contributes to a stable economic base here.

Merriman estimates that the next quarterly taxable retail sales report will show Oak Harbor near minus 4 percent.

“It’s kind of stabilized there right now,” Merriman said, although he couldn’t offer any future projections.

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