Spring is a time full of hope. Last spring, we hoped we would soon see the last of COVID. That didn’t turn out the way we’d hoped. But in many other ways, 2021 turned out to be a pretty good year.
The big surprise was how strong the economy was. Despite a few remaining weakened sectors and a frustratingly tight labor market, the economy thrived, both locally and nationally. Locally, San Juan County sales tax revenue grew 46% in 2021, after a small dip in 2020. With people traveling again, accommodations thrived, and lodging tax revenue (a subset of sales tax revenue) grew even more – a whopping 80% – after a 25% dip in 2020.
Strong state and national building and real estate markets also showed locally. Both the number of sales and the price of real estate in San Juan County rose dramatically in 2020 (51% in number of sales, 57% in dollars). In 2021, while the number of sales dipped slightly, the dollar volume rose another 21%, reflecting the increase in property values. Prices are driven upward, in large part, by the shrinking inventory of houses for sale. The number of properties available for sale shrank 45% from Jan 2020 to Jan 2021 and another 33% from Jan 2021 to Jan 2022.
Transfers of property ownership are subject to Real Estate Excise Tax (REET) – essentially, a sales tax on real property. REET in San Juan County includes components for the state, for the Land Bank, for capital projects, and, most recently, for Affordable Housing. REET revenue for the Land Bank grew 49% in 2020 and another 20% in 2021. REET revenue for capital and for housing grew proportionately.
A related source of revenue is the revenue from recorded documents. Revenue from recorded documents – which largely record changes to real property ownership – experienced similar rates of growth: 32% and 22% in 2020 and 2021, respectively. Recorded documents contribute to affordable housing projects and to the preservation of historic documents within the County.
Property development typically follows property sales. Construction is the largest part of local sales tax revenue, representing 36% of taxable sales in San Juan County for the first three quarters of 2021. (Fourth quarter data is not yet available.) Construction activity also brings in revenue for building and planning permits. Last year was the County’s second year of double-digit growth in permitting revenue – 24% in 2020 and 19% in 2021.
Inevitably, with all that unexpected revenue coming in, cash accumulates. Ending cash in the County grew 28% in 2020 and another 45% in 2021. Of course, most of that cash ($57.4 million of the $71.7 million total) is restricted funds that can be used only for very specific purposes. For example, $14 million is in the Land Bank and can be used only to purchase, maintain, or endow the future maintenance of Land Bank properties. Another $11 million is in the Roads Fund; most of those funds are committed to projects budgeted for 2022. In the Affordable Housing Fund, almost $6 million is available for affordable housing projects. So even though the money is largely restricted, it will allow the County to complete much-needed work.
For now, it’s almost spring again, and I’m once again full of hope. I’m hopeful that the County will use its accumulated funds effectively, and for their intended purposes. I’m hopeful that we will, at last, really put this COVID thing behind us. And I’m especially hopeful that global conflicts will find a way to peacefully resolve.
F. Milene Henley, San Juan County Auditor