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MONDAY, MAY 23, 2011, 8:36 P.M.

Spokane council rejects property tax increase

New property taxes are off the table for Spokane in the August primary and probably the rest of the year.

The Spokane City Council on Monday voted 5-0 against a proposal to ask voters to increase property taxes to help balance the budget. Spokane Mayor Mary Verner already had dismissed the idea and administrators said declining property values may make such a tax boost less helpful.

"It had no traction," said Councilman Richard Rush. "There was a pretty good analysis that if we did, we wouldn't have anything to show for it given the current trend in property valuations."

Cities generally collect the same amount of property taxes each year plus 1 percent and a figure to represent new construction. As property values fall, the city's levy rate increases (just as it decreased when property values increased) but the total amount collected by the city in property taxes doesn't fluctuate much without approval of voters.

However, cities' levy rates can't go higher than $3.60 per $1,000 of property value. According to an analysis by the Spokane's finance department, Spokane's rate currently is $2.72. If property values decrease another 10 percent, which some say likely already has occurred, the city's levy rate will increase to $3.07.

A levy lid lift that would fix the city's $6.6 million deficit would bring the city's levy rate close to the $3.60 cap, meaning further drops in property values could result in the city collecting less in property taxes. The city could ask voters to go above $3.60, but it would need at least 60 percent support to win approval.

Councilman Bob Apple said he voted against taking the tax increase to the voters because the city hasn't done enough to balance the budget without new taxes.

Council members Nancy McLaughlin and Jon Snyder were absent at Monday's meeting.

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Jonathan Brunt
Jonathan Brunt is an assistant city editor.

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