Shoppers aren’t buying enough cars, clothes and other taxable goods in Douglas County to keep their government from running into red ink, county officials say.

And that means taxpayers likely will be asked to pick up the tab.

Craig Weinaug, county administrator, said that the county’s sales-tax fund — the pot of money used to pay off debts for construction of the county jail and half of the Community Health Facility — was expected to come up short as early as 2007.

If the county wants to be able to pay its bills, Weinaug said, either the sluggish economy must reverse itself or the government must find the money somewhere else, either by boosting property taxes or cutting costs.

Either way, Weinaug said, there’s no doubt that the government must do something to fill the financial gap soon — or risk more financial and political pain later.

“It’s something that needs to be addressed now,” Weinaug said. “Too often, you see governments pretend that there’s no problem, and then it gets bigger and bigger and bigger until it becomes a state-of-Kansas-sized problem.

“We pride ourselves on anticipating problems far enough in advance that they don’t become really big problems later.”

Weinaug said he could foresee setting aside money from property taxes, as early as next year, to help cover the anticipated shortfall. Whether such a move would trigger an increase in the property-tax rate would depend on how much other programs and projects were curtailed.

Maryanne Smith, left, and Mariah Dickson, both 9, try to tempt 1-year-old Justin Hicks with a piece of birthday cake during a party at the Indoor Aquatic Center. Though the city of Lawrence isn't feeling the slump in sales tax as much as Douglas County, city officials say the economy must rebound before any new projects using sales tax funds are considered. The .88 million Indoor Aquatic Center was opened in 1996 and is being paid for with sales tax receipts.

The main problem, Weinaug said, is the sluggish economy.

Back in 1999, when the county projected its sales-tax revenues for the next decade, officials expected totals to jump by about 2.5 percent a year. And they had history on their side: Sales increased 5.5 percent in 1999, 8.2 percent in 1998 and 4.3 percent in 1997.

“We were being conservative,” Weinaug said.

But then things started to slip. The dot-com crash and ongoing economic downturn started to constrict retail sales, which only added to the rising expenses of paying off the county’s debt.

So far this year, sales-tax collections are up only 1 percent from this time a year ago, Weinaug said.

Carrying that projection out for the next seven years would leave the county’s sales-tax fund short by nearly $75,000 in 2007. The debt would balloon to $512,000 a year later, then to $1 million in 2009 and $1.5 million in 2010.

‘Cushion’ deflates

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It would represent quite a shift from as recently as 1999, when the fund had nearly $3 million left over, generated from a special 1-cent countywide sales tax approved by voters in 1994. The sales-tax fund pays off the construction debt on the jail and health building, plus a portion of salaries, benefits and operational costs connected with the two projects.

“We’ve been able to accumulate a pretty significant cushion,” Weinaug said. “Starting this year, we estimate that the revenue we will generate will be less than the yearly debt requirement.”

But changes in several variables could prevent the fund from falling short, while still being able to meet all of its obligations, said Pam Madl, the county’s director of administrative services.

If sales-tax revenues would increase by 2 percent a year, Madl said, the fund would be expected to stay in the black into 2008.

The county also is considering options for refinancing. That could allow the county to take advantage of lower interest rates, she said, or to extend the term of the debt to keep revenues and costs in line.

“It’s a problem that we need to be aware of early, so we can be prepared with a plan, if the economy doesn’t pick up again,” Madl said. “I think, with these numbers, we can find a solution that doesn’t have a huge negative impact. We’ll do everything we can to mitigate any negative impact.”

Douglas County commissioners are expected to discuss the issues as part of their preparations for approving the county’s 2005 budget, a process scheduled to start in the spring. Earlier this year, commissioners opted against making shifts to their 2004 budget to prepare for the expected shortage in sales-tax revenues.