Income tax revenue for the city of Kent saw a double-digit increase in 2012 over 2011, as the total collected rose 12.6 percent.
Kent collected $12,063,299 in total income tax revenue last year compared with $10,711,766 in the year prior.
City administrators originally projected $10.9 million in revenue for 2012 .
The large increase last year marks the early start of an upward trend in collections for the Tree City after being hit hard by the Great Recession, which saw Kent's income tax revenue start a decline in 2008 that lasted through 2010.
Income tax revenue started to rise in 2011, which saw a 2.5 percent increase above 2010 collections.
Kent Budget and Finance Director Dave Coffee said the 12.6 percent increase for 2012 is a welcome improvement.
"We should not lose sight of the fact that the actual dollar increase just barely surpasses our average annual revenue reductions in Local Government Funds, Estate Taxes, and a few other taxes," Coffee said via email.
The complete breakdown of 2012 income tax revenue was not immediately available.
Kent City Manager Dave Ruller said they don't have final numbers but it does look like the double-digit increase will offset the more than $600,000 in lost revenue due to cuts in state local government support.
"It looks like our economic gains have enabled us to absorb the loss in state funds, which is great news," Ruller said. "It's unclear if we'll come out of 2012 ahead, but even if we do, it will not change our 2013 budget numbers or our financial strategy."
That financial strategy has been one of annual budget cuts and restrictions. In November, Kent City Council approved an overall budget for 2013 that included more restrictions and cuts to individual department budgets.
Last year's sharp rise is likely connected to the close to 850 temporary construction jobs in Kent during the past 18 to 24 months thanks to the downtown redevelopment, new student housing and several business expansions or relocations.
Ruller said with the ongoing construction it's too early to tell how much of that tax revenue boost is due to the temporary construction workers or the new jobs created by all the redevelopment.
"But I am grateful for either one right now given our immediate fiscal challenges," he said.
In recent years, Kent's financial picture has been one that included forecasted deficitis each year that forced the city to rely on dwindling cash reserves to balance budgets in which the city spent more than it brought in.
The city has been using reserve funds since 2008 to cover budget deficits. As a result, the reserve cash dwindled from $12.7 million at the end 2008 to what was projected to be $7.3 million at the end of 2012 — though that projection included an estimated deficit of $1.4 million for last year.
Ruller said if the trend of rising income tax revenue continues one of the first priorities of the city administration will be to rebuild its reserves for future lean years.
"The good news is that in 2012 we might not have to use our reserve revenues, but whatever small gains we can achieve will do little to get the balances back up to previous levels and it will take a couple of years of consistent gains before our balances get to a point where we can recommend a change in our financial strategy," he said. "Until then, we'll continue to manage our budget extremely tightly, making cuts wherever possible and constraining spending to our most pressing needs only."
Despite continuing concerns, Ruller said the rise in collections is encouraging.
"We're hoping it's an indicator that the investments that we made to stimulate an economic recovery are yielding results," he said.