Building sector suffers losses
Tax receipts fall $40 million short of forecast
By Rachel Cavanaugh
Editor, The Sentinel
Washington state tax receipts for the last month fell nearly $40 million short of November forecasts, according to a report released last week.
Last Tuesday, the Economic Revenue Forecast Council (ERFC) reported that, after being adjusted for special factors, the period of Feb. 11 to Mar. 10 was down 10.1 percent from last year, bringing the cumulative shortfall to $239.8 million.
The hardest-hit sector was home building and garden supply stores, suffering a 22.3 percent decline. In Klickitat County, local shop owners said they are worried about the coming year.
Jim Allyn, owner of Allyn's Building Center in Goldendale, said although his store did okay in January and February, he fears what lies ahead.
"I'm really scared because basically the contractors in town, none of them I know have anything to build," said Allyn. "If it stays like this...our business will be down 40 percent."
If people are not building homes, he added, they don't go into building supply stores. Local contractors confirmed the scarcity of work.
"I haven't done anything since the beginning of the year - nothing big. A porch here or there," said Shannon Rogers, of SR Construction in Goldendale. "I started to see it fail towards the end of last year.
"People are holding onto their money," Rogers added. "They're scared."
The private contractor said he normally has three to four jobs lined up this time of year but at the moment, has nothing.
Eric Swenson, senior economic forecaster for ERFC, said the drops are linked to real estate trends and the housing crisis. People are not moving, buying land to build homes, or renovating recent purchases.
Beyond that, many current homeowners have put off remodeling jobs for when the economy stabilizes.
The initial ERFC forecast was made in November. From there, receipts for this last month fell $39.8 million (4.9 percent) short, with Revenue Act receipts down $32.5 million and non-Revenue Act payments down $7.4 million.
That said, there may be a silver lining.
Late last month, the legislature asked ERFC forecasters to prepare a second "guidance" report, in light of continuing economic downturn. The interim, non-official forecast was meant to aid legislators in drafting a supplemental budget for the current fiscal year, as well as the next biennium.
Although Tuesday's report showed receipts down from November, they were up from the Feb. 19 guidance forecast. Without special factors, the predictions were almost dead-on.
"Believe it or not, that's sort of good news," said David Ammons, communications director for the Washington Secretary of State.
Swenson added that, unlike late last year when no one knew how bad things would get, they now have a better idea of what they are working with.
"There's always room for surprises but with this we have a pretty good grasp," said Swenson. "When it got bad, it got bad really quickly...we think the plummeting is over.
Nevertheless, Swenson underlined that even staying at a low level means a "pretty big drop in revenue."
Aside from building supply, sector with significant drops in the last month include gas stations and convenience stores (16.7 percent), non-store retailers (11.4 percent%) and motor vehicle dealers (9.6 percent).
Until numbers get better, local business owners are making adjustments. According to Rogers, some are coming at their own expense.
"It's starting to get a little bit cutthroat," said Rogers. "People are going down and doing [jobs] for practically nothing, just so they can make their rent.
"It isn't doing us any good. Instead of on job, you have to do three."
Cattlemen award goes to Kreps Ranch for third time
By Andrew Christiansen
Reporter, The Sentinel
The Klickitat County Livestock Association held it's annual banquet in Goldendale last Saturday, announcing the selection of the Kreps Ranch as Cattlemen of the Year for 2009.
The Kreps Ranch traces its roots back to 1883 when Simon Kreps first homesteaded at Laurel in the western part of the county. The ranch grew to 320 acres by 1926 and raised Hereford cattle until the 1950's when shorthorns were brought into the mix. In 1967, Russell and Marie Kreps sold the ranch to their two sons, Oliver (Chip) and Russell W. (Bodge). Bodge took about 3,000 acres of timber land and Chip continued to farm and raise cattle on the remaining 7,000 acres.
The herd grew to 700 head of cows by 1986 and began to transition to black baldy cows with the influx of black angus into the herd.
The Kreps Ranch currently is an angus, cow-calf operation with land in hay and timber operating on several thousand acres roughly bounded by White Salmon and Bingen on the south, Trout Lake in the northwest, east to Panakanic Road, southwest of Laruel, and along the Rattlesnake Creek to Husam.
This is the third time the ranch has been recognized, with Russell and Marie receiving the award in 1951, and Chip and Pat named Cattlemen of the Year in 1984. Receiving this year's award on behalf of the family was Keith Kreps. Keith's mother Pat is the head of the operation these days with Keith and his wife Susan heading up the cattle operation. Brother, Chris and his wife Shelly run the timber operation and another brother, Kelly is more involved in the farming and haying business. The traditional field day has been set for May 30. The evening was also a time to recognize the recipient of the O.P. Kreps Pioneer Memorial Award and the Jim Bridgefarmer Distinguished Service Award. Stanley Crocker of Centerville, was presented a plaque for the O.P. Kreps Award. Crocker is a fourth generation farmer/rancher in the Centerville area. He raised purebred Hereford cattle and sells quarterhorses from the farm he still operates. Crocker was a charter member of the Livestock Association which formed in 1950. Ray Thayer was named the recipient of the Jim Bridgefarmer Distinguished Service Award for his years of dedication to the livestock industry and Klickitat County.
Gas company optimistic about Bickleton site
By Rachel Cavanaugh
Editor, The Sentinel
Workers at a natural gas drill site near Bickleton are expected to reach total depth within three weeks, according to company officials.
Delta Petroleum has been drilling at a site known as Gray 31-23, about 12 miles southeast of town.
Although it will not know for sure what resources lie within the Columbia River Basin site until final analyses are concluded, Delta chairman and CEO Roger Parker was optimistic in a Mar. 2 financial report.
"Exciting and recently obtained drilling information has strengthened our belief in the vast resource potential of this project," Parker said of the Bickleton site.
Twice now the company has stopped drilling to run electric logs and has also taken core samples, according a Delta news release. So far, the well has encountered "numerous" sandstones, it said, containing several hundred net feet of porous and permeable sands.
The numbers are based on wireline logs and core analysis.
Porosities range from 12 to 17 percent with an average of 14 percent, according to the new release, which noted "very good" permeabilities, ranging from 27 to 107 millidarcies (mD).
"These sandstone intervals required very high mud weights to control gas flows suggesting a highly over-pressured gas system," said the release. "The gas column appears to be much higher in the stratigraphic section as compared to other wells in the basin."
According to Delta, the calculations -- based solely on logs and cores -- indicate the potential for "significant" gas volumes. However, specific reserve estimates will not be available until drilling is complete.
Until that happens, the company will not commit any more capital to the Bickleton project. Nevertheless, it said it has begun seeking permits for an additional well.
"The company's exploration program in the Columbia River Basin was marked by significant accomplishments during 2008," said Parker.
Income tax bill not likely to move, says Chandler
By Rachel Cavanaugh
Editor, The Sentinel
A senate bill introduced earlier this year that would impose a Washington income tax has little chance of getting through, local legislator Bruce Chandler told The Sentinel last week.
According to the representative for the 15th Legislative District, Senate Bill 5104, sponsored by democratic senator Rosa Franklin, will be hard-pressed to make it off the legislative floor.
"I think that particular bill is in trouble, primarily because ...it requires a constitutional amendment," said Chandler.
"Some democrats thought that they could draft it in a certain way to finesse the language to avoid a constitutional amendment but there's a growing sense among legislators that the bill does not accomplish that," the republican legislator added.
The bill, which had its first reading on Jan. 13, targets "all taxable income of resident individuals, estates, and trusts and on all individuals, estates, and trusts deriving income from sources in Washington for each taxable year based on the type of return filed and the amount of income," according to an online legislative digest.
Chandler, who stressed he would not vote for the bill, said during such tough economic times, Washington residents should not have to deal with an extra financial responsibility.
"I believe it's counterproductive," said Chandler. "There's no question a main reason people live on the north side on the river...is the burden of the income tax in Oregon."
Yet Franklin defended her bill in a recent opinion-editorial, emphasizing the move would not only impose an income tax. It would also reduce other taxes, evening out the burden.
She pointed to advantages like cutting sales tax in half, down to 3.5 percent; lowering property taxes by eliminating the state's share; capping regular property tax at 0.64 percent; and allocating a portion of revenues into a student achievement fund.
"[The bill] would not increase taxes but simply spread our existing level of taxation over more mechanisms," Franklin said. "The benefits are two-fold: We would eliminate the regressive, punitive aspect of our tax structure and would improve our ability to ride out the booms and busts of our increasingly cyclical economy."
Yet Chandler said he think it is unlikely to pass. Even if it did, it would have to go to a public vote in November, he added.
"I think its chances are remote," said Chandler.
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