Contrary to the theory that the cost of living in Puget Sound increases as you approach Seattle, a recent comparison reveals that groceries, utilities and even homes are more expensive in Olympia than even nearby Tacoma.

Going against the grain of conventional wisdom, a cost-of-living analysis released by the Thurston Regional Planning Council in conjunction with The American Chamber of Commerce suggests that Olympia and Tacoma are both more expensive than the national average.

In fact, Washington cities in general tend to have a higher cost of living than the national average. The Olympia area index, which also includes Lacey and Tumwater, is 107.2, meaning prices here are 7.2 percent above the national average. Tacoma’s rating was 103.9.

The biggest reason for the difference is housing costs, says Dennis Matson, executive director of the Economic Development Council (EDC) of Thurston County.

Olympia’s housing costs were 18.8 percent higher than the national average, while Tacoma homes cost 5.2 percent more than the average.

Gary Brackett, the manager of business and trade development for the Tacoma-Pierce County Chamber of Commerce, says there are subtler reasons for South Sound’s elevated costs—problems inherent in livability surveys in general.

“It’s about as good as they come,” he says of the National Chamber’s Cost-of-Living Index rating system, “but there are inequities even in it.”

Healthcare, for example. Healthcare costs in Olympia and Tacoma are dramatically higher than the national average, he says. That’s because state law forbids government from subsidizing room rates. Tacoma and other cities in the state are being compared to cities where subsidization is legal—and aggressively practiced, he says.

He also points out that the Cost-of-Living Index is based on pre-tax income rather than disposable income, which further confuses the question of which communities have the lowest cost of living.

If there’s an upside to such inequities, says Matson, it is the fact that they’re at least consistent.

“We’re pretty much where we were in 1994,” says Matson of the year the statistics were last taken by the EDC. There was a five-year hiatus before the Thurston Regional Planning Council decided to take part in the national survey. “There’s a misconception that this is a low-cost area and we’re not. We’ve always been one of the higher cost-of-living areas in the state. Tacoma also has older housing stock.”

It’s good to have a Cost-of-Living Index that’s not too high or too low either, Matson says.

“If you’re too low,” he says, “that tells you the economy is not in very good health. If you’re too high, it means you’re in an inflationary mode and it’s starting to affect the standard of living.”

The highest cost of living composite, not surprisingly, is in New York, which is 232.1 percent of the national average. The lowest cost of living was found in San Antonio, Texas, with just 89.9 percent of the national average.

Although Seattle and greater King County, which commonly have higher costs of living than Thurston and Pierce counties, do not participate in the Cost-of-Living Index, most other metropolitan areas in Washington came in below Olympia, including Bremerton at 103.2 percent of the national average and Spokane at 105.3. Bellingham, at 107.7, was the only Washington city in the survey to surpass the Olympia area in costs.

Other West Coast cities participating in the index include Portland, Ore., which had a composite of 111.7 percent; Sacramento, Calif., 112.8; Oakland, Calif., 159.2; and Los Angeles, 126.2.

“Cost of living information is some of the most frequently requested information from callers to the Regional Planning Council,” says Carolyn Cummins, assistant planner. “We get calls from people who are considering a move to or from our region or want to evaluate a salary they’ve been offered for a new job. We’re really happy to be back in the game.”

The EDC also gets its share of requests for the number, Matson says, even though it hasn’t had them to give for five years.

“This will be nice to have available every quarter,” Matson says. “Existing companies here have been trying to find out how to handle cost-of-living allowances call us routinely for that sort of thing. We’ve had to rely on Seattle CPI stuff, which is way overstated.”

The Cost-of-Living Index is based on prices taken in each jurisdiction of 59 items that fall in six categories. The categories include groceries, housing, utilities, transportation, health care and miscellaneous goods.

“I visit five grocery stores each quarter in Olympia, Lacey and Tumwater,” Cummins says. Some of the items include a dozen eggs, a half gallon of milk and Folger’s coffee. The Thurston Regional Planning Council uses 2.5 days of staff time to gather data every quarter, which is tabulated with other information by the American Chamber of Commerce.

The most recent report data were gathered in January. For more information on the report, call the Council at (360) 786-5480.

By Kamilla K. McClelland, Business Examiner staff