Dramatically slumping real estate sales across Washington State continue to drag down State revenues, adding to an already bleak budget picture.
From the latest state revenue collection report (pdf):
Taxable real estate activity remained weak in February. Real estate tax activity reported by the counties was 56.4 percent below their year-ago level. January receipts had declined 47.1 percent year-over-year. Taxable real estate activity has declined twenty-five of the last twenty-seven months on a year-over-year basis.
The weakness in real estate activity is evident both in the number of transactions and in the value per transaction. A breakdown of the number of transactions and value per transaction is not available for February but for the month of January the number of transactions was 19.4 percent below the year-ago level while the average value per transaction declined 34.4 percent. The number of transactions has declined on a year-over-year basis thirty-seven of the past thirty-eight months. The value per transaction has declined on a year-over-year basis for sixteen of the last seventeen months.
Although real estate excise tax revenues came in 5% higher than forecast for February, they made up just 3.8% of the total General Fund-State revenue.
Compare this to the March 2007 Economic and Revenue Forecast (pdf):
The real estate excise tax is the General Fund-State’s fourth largest revenue source. Real estate excise tax receipts are expected to increase 44.9 percent in the 2005-07 biennium compared to 17.6 percent for total GFS revenue. Revenue from the real estate excise tax is expected to account for 7.0 percent of GFS revenue in the 2005-07 biennium, up from 5.7 percent in the 2003-05 biennium and 4.1 percent in the 2001-03 biennium. Next biennium the real estate excise tax is expected to account for 6.0 percent of total GFS revenue.
Slumping RE excise taxes are by no means the primary cause of our state’s budget woes, but they certainly aren’t helping matters. It would appear that perhaps it wasn’t such a good idea to make plans based on an ever-increasing number of real estate transactions. Who knew.
Hat Tip: Adam Wilson @ The Olympian