Island County government last month received its first allotment of Rural Counties sales tax funding, a new revenue source amounting to about $450,000 annually and earmarked for economic development.

According to Island County Commissioner Mac McDowell, the money will likely go toward capital projects. The money must be used to spur economic growth, he added.

“The idea is it’s supposed to help you build infrastructure to support local economic development,” McDowell said Monday. “It’s not just another cash cow for our normal capital needs.”

Rural counties funding authorizes designated counties to collect an additional .008 of 1 percent of local sales tax revenues from the state. It doesn’t increase local sales tax. Enacted through legislation first called “distressed counties funding,” rural counties money is given out to provide infrastructure assistance to non-urban areas throughout the state.

Island County, which began collecting rural tax revenues last month, has banked $42,062 in the county’s general fund.

So far, the only local payout of rural counties funding is the $32,500 commissioners have earmarked for the Island County Economic Development Council in 2003. The EDC was previously supported by the county’s general fund, but lost that support due to budget cuts in 2002.

Beyond this, the board of commissioners has yet to decide on specific projects, though discussion on how to use the rural funding isn’t far off, McDowell said.

“We still have to talk it out,” he said.

The board of commissioners will probably meet with officials from Oak Harbor, Coupeville and Langley soon to discuss local projects that can receive rural counties funds.

“It’s not going to be anything immediate,” McDowell added.

Prior to this year, Island County was disqualified from rural status because its population exceeded the 100 persons per square mile necessary for such designation. Thanks in part to the lobbying of Sen. Mary Margaret Haugen, the rural counties bill was amended to include counties “smaller than 225 square miles” in total size.

Island County was the only jurisdiction granted rural status under this new designation.

McDowell said this new funding source is a good thing. He said it won’t turn the economy around by itself, but it is a step in the right direction.

“Counties need economic development because people need jobs,” McDowell said. “A good, wage-paying job is probably the best social program there is. If this money can lead to more job creation in the county, that’s great.”

McDowell said the money could support “a wide range of things.” He pointed to urban growth areas in Freeland and near Goldie Road in Oak Harbor as potential candidates for business development. “The construction or expansion of public utilities such as sewage treatment could facilitate the development of commercial structures,” he said.

“Someday those two areas will be served by sewer,” he said.

Though he said he wants to do more research on it, McDowell said he has envisioned the possibility of putting money up front to help businesses develop utilities.

“The problem with utilities as I see them is that no one business can afford to put in that infrastructure,” he said.

Another potential use for rural funding would be in helping to bring an airport and consistent commuter air service to the island, perhaps in Oak Harbor. An airport would be good for both corporate business and tourism, he said.

Regardless of how rural counties revenues are used, McDowell said it’s crucial that commissioners stay focused on the goal of making Island County more cost-efficient for new businesses.

“That’s the absolute best we can do,” he said.