Tightening of the belt

The state of the economy is something nearly everybody knows, either from personal experience or just gut feeling.

One way to measure just how much of a decline has taken place is to look at what the state takes in from the variety of consumption taxes levied on purchases. It is one of the parameters most watched by those given the task of balancing the budget each year.

Statewide, there was a 20 percent reduction in total taxes collected by the end of June in 2010 compared to that same period in 2008. This year that number was $2.9 billion, off from $3.6 billion two years prior.

That includes individual income taxes, down to less than $1.4 billion in June, 2010 from $1.7 billion in the period in 2008, also a 20 percent decline. In the same period, corporate income taxes dropped to $137 million from $213 million, a 36 percent decrease indicating just how hard the economy has been on business.

"I think we have been disappointed with the state's recovery," said Rep. Frank Henderson, R-Post Falls.

In a consumption-dependent world, personal spending is critical to economic growth, and much of North Idaho has been hit even harder.

Kootenai and Shoshone counties have recorded a 24 percent decline in general sales tax collections, and Benewah County a 15 percent decline. Bonner and Boundary counties have remained more stable.

There is a catch, however, in analyzing the numbers. Sales taxes are reported in the county in which the business headquarters is recorded, so sales taxes large companies such as Albertson's do not count in the final tally.

"I think it would be good to have some more corporate offices here," said Coeur d'Alene Mayor Sandi Bloem.

But the taxable sales reported through June tell a story of decline. Shoshone County declined to $10 million in total taxable sales at the end of June from $13.2 million in June, 2009. Kootenai County showed similar decreases, to $106 million from $139 million.

Benewah County declined to $3.9 million from $4.6 million. Bonner County held steady at $34.7 million in each of the reporting periods, while Boundary County only dropped off slightly to $6.8 million from $7 million.

Angela Brown of Post Falls is among those who are cutting back on spending to help balance their budgets.

"Absolutely," she said Sunday after returning some merchandise at Ace Hardware in Post Falls. "We are not going out for fast food any more. And returning paint I'll probably need next week. And I try not to use a lot of gas."

Taxes on motor fuels is one of the few major collections that have gone up, by $13 million to $233 million at the end of June, 2010, but only after dropping by $18 million to $220 million at the same time in 2009.

The drop in taxable sales reflected in the numbers obviously affects the state's budget, and general fund spending declined to $2.2 billion in the fiscal year through June 30, 2010 from $2.36 billion in 2009 and $2.7 billion in 2008.

But the lack of available cash also means cuts in revenues shared with cities and counties.

Coeur d'Alene's share declined to $415,166 in the third quarter of the state's fiscal year that ended June 30, off from $421,514 in 2009.

"We are what we call a giver city," Bloem said, getting back less proportionate to what it creates compared to smaller cities.

Other cities in North Idaho saw similar drops in shared revenue.

Post Falls brought in $245,069, compared to $240,271 in 2009. Hayden's take was $123,443, off from $125,925 in 2009. Rathdrum got back $56,959, compared to $57,491 in 2009.

Sandpoint was up slightly to $85,772 from $85,379. Bonners Ferry took in $19,508, close to the $19,189 in 2009. Kellogg also gained with $22,638 this year, up from $21,048 in 2009, while Wallace lost ground with $6,500, down from $6,971 in 2009.

Those results are part of the reason the city of Coeur d'Alene is looking at raising its property taxes, Bloem said.

"We don't want to reduce services," she said.

The delayed economic recovery has created a sense of pessimism, Henderson said.

"Nobody is giving optimistic projections," he said.

To help that process, the state needs to be aggressive to recruiting new employers and helping out the ones that are here,

The general consensus is that it will be a year and a half or two years "before the economy starts to smile on us," he said.