Here is a chart of annual taxable retail sales in the city of Seattle for the years 1994 to 2008. To remove the effects of inflation, we have adjusted spending to 2008 values using the BLS’s Seattle Consumer Price Index.
The key things to note are: (1) for 2007, the peak year of the last expansion, real taxable retail sales for goods and services other than construction were lower in Seattle than they had been in 2000 and (2) the lack of growth in real sales other than construction from 2000 to 2007 mirrors the lack of growth in employment that is documented in our Policy Brief Seattle’s Lost Decade.
The financial importance of construction to the city’s government is demonstrated by the following chart, which shows construction’s share of taxable retail sales in the city:
For 2008, construction represented almost 25 percent of the city’s retail sales tax base. At the 2000 peak of the local economy, construction’s share was less than 20 percent, while in the mid 1990s it was less than 14 percent. Construction’s share is headed down, and we may well see it back near 14 percent in the next few years.
The next several years are likely to be grim for city tax revenue. For more on this, see the August update to the Seattle revenue forecast, available here.