Tax receipts down in city

All combined, Oak Harbor residents will receive an estimated $10.2 million from the federal government in economic stimulus checks this spring.

Retailers are hoping that the extra money will help to reverse a somewhat worrying trend of slumping retail sales.

Oak Harbor Finance Director Doug Merriman reports that overall retail sales in the city are down by 3.8 percent over the last 12 months, as compared to the 12 months before that.

Much of that drop, Merriman said, is due to Whidbey Island Ford closing down. The sale of motor vehicles and parts was down 21 percent over that period, which accounts for about half of the 3.8 percent drop.

Oak Harbor Chamber Director Jill Johnson said the downturn in retail sales is a concern, but “not a doomsday scenario.” She said the military-based, local economy is pretty well insulated from national trends and she’s hopeful that nice weather will bring out shoppers.

Johnson is a little skeptical of the federal economic stimulus program.

“It will help if people use the money for what it was intended for — which is to go out and shop,” she said. “I hope people will go out and have a nice dinner and buy something fun and unexpected in Oak Harbor.”

The merchants themselves report a slow winter, but they are hopeful for the future.

Beth Graves, owner of Bayleaf, runs her specialty food and wine shops in both downtown Oak Harbor and downtown Coupeville. She said business has been pretty slow so far this year, which she attributes largely to the lousy weather.

Graves said her Coupeville shop has been doing a little better than the one in Oak Harbor, especially with Pioneer Way ripped up for the waterline replacement. Also, she said the festivals in Coupeville help bring people out and about.

With a possible recession looming this summer, Graves hopes that local residents will “take a vacation in their own town.”

“Rising gas prices may keep tourists away, but I’m hoping that locals will come out and support the businesses they know and love,” she said.

Cheryl Wieldraayer, manager of Ace Hardware in Oak Harbor, agrees that business was slow during the first quarter of the year. She said things should pick up as the sun comes out and people start itching to do outside projects.

“When it gets nicer, people come out of hibernation,” she said.

Jill Schacht, owner of downtown Oak Harbor businesses Fox Pointe and The Casual House, said business has been “holding steady,” but she also thinks things will pick up if the weather brightens up.

“It’s hard to convince people it’s time to buy spring clothes when it’s cold and raining out,” she said.

Schacht said the Harborside Merchant signs that the city put up last year directing traffic to the downtown shops have definitely helped a bunch.

The latest statistics from the state Department of Revenue report that statewide retail sales were up by 7 percent in 2007 as compared to 2006.

Over that period, sales from retail outlets, excluding taxable sales generated by construction and other non-retail industries, in Oak Harbor slumped 2.38 percent from $198 million to $193 million.

But in Coupeville, sales from retail outlets climbed by 1.54 percent in 2007. Sales were even better in unincorporated Island County, with a 4.15 increase.

As for local government, Merriman said the decrease in retail sales means the city of Oak Harbor will collect less sales tax. He estimates it will translate to a $125,000 drop in sales tax collection this year. The city collects about $3.3 million in sales tax a year.

Merriman said the decrease in funds won’t be a big problem this year because the city has a 15 percent fund balance “cushion” to handle variabilities in income.

“If the reduction continues for two or three years, that would start becoming a significant problem for our budget,” he said.