The July 2015 Economic and Revenue Forecast
July 22, 2015
Click links for a discussion of major forecasts
The Great Recession and a slower than normal recovery took a major toll on the county's second largest tax revenue source. Beginning in 2012 this revenue began to recover in earnest and has now exceeded its previous highs. The retail sales tax in King County is currently 9.5%, however the bulk of this revenue is taken by the state and our regional transit authority (Sound Transit). The remaining portions King County receives go on to fund metro transit, criminal justice programs, mental health programs, children and family service programs and general government operations. Click here for a visual representation of the breakdown.
After years of record growth during the housing bubble, the county's assessed value declined from 2010 through 2013. Years 2014 and 2015 marked a major turnaround in assessed value, in fact, as of 2015, assessed value has returned to an all-time high. A frequently asked question is "if assessments are falling, shouldn't my property taxes fall too?" The King County Assessor's website has a great FAQ for that and similar questions.
Inflation can be a confusing topic because it can measured in a number of ways. Since 2009 we've experienced relatively low annual inflation in most broad indexes, which has some benefits and other drawbacks. One benefit is that labor and operating costs can be lessened with lower inflation. Inflation policy makers target for an annual inflation rate of around 2%.
In unincorporated areas, the county levies two identical 0.25% excise taxes on all real estate transactions that go on to fund capital improvements and parks. A collapse of the housing market drastically lowered REET collections as both demand and prices fell precipitously. Prices and volume are expected to grow, but the recovery of this revenue will be held in check by annexations of unincorporated parts of King County.