Because state laws are open to interpretation with regard to local taxes, the freeholders specifically addressed some gray areas regarding taxation and bonded indebtedness in the proposed city-county charter’s Article XI, “Financial Responsibility.” Still, the subject of cost is probably the most difficult topic to address in relation to the proposed new government structure.
The present situation
Under the current system, all Spokane County residents pay about the same basic property taxes under a countywide system that applies to all property owners, no matter where they live in the county. In specific areas or districts within the county, additional bond or levy payments for schools, parks, public facilities, etc., are added to the basic property tax. These payments vary by location.
Cities in the county also have the power to levy business and occupation (B&O;) taxes on businesses that operate within their jurisdictions. There are now no municipal B&O; taxes in force in Spokane County, although the City of Spokane has used this tax method in the past.
Finally, cities can levy utility taxes that are added to the power, water and garbage bills of city residents. At present, residents of most cities within Spokane County pay utility taxes.
What the charter proposes
Changes on basic property taxes.
The charter would not appreciably change the current system for basic property tax that is already administered on a countywide basis. Nor would the charter affect school or fire levies, which are exempted.
Article XI of the charter addresses several areas including B&O; taxes, bonded debt and utility tax. In general, the charter proposes specific limitations on the taxing power of the new government. These limitations go beyond state law, and what currently exists for the City of Spokane and Spokane County.
No B&O; tax or newly authorized tax without a vote. The proposed charter requires a vote of the people to approve a B&O; tax, even though state law does not require a vote. And if the legislature were to give cities and counties new taxing authority, the proposed Spokane city-county charter requires that those new taxes be approved by local voters before they could be collected here.
Limits to bonded debt. The charter holds the proposed government to one half the debt limit allowed by state law without a public vote or unless a super-majority council vote is achieved.
It requires a public vote on all debt in excess of 10 percent of the general fund and/or in excess of 1.5 percent of assessed value of property in the county, unless a four-fifths majority - 11 of the 13 council - were to agree.
Existing debt would not be altered by the proposed charter and would remain the obligation of the constituents for whom it was originally incurred.
That is, former city residents would pay off city debts and residents of the former unincorporated county areas would be responsible for current county debts.
Utilities tax - you pay for what you get. Under the proposed charter, this tax could be used differentially, so that urbanized neighborhoods with more services would pay an amount different from what residents pay who receive less services in outlying areas.
This section of the proposed charter is one of its most controversial. There are those who believe that a new government could, in effect, subsidize current city taxpayers with increased taxes collected in outlying areas. Others believe the new government could create city-like services throughout the county at prohibitive costs.
Still others maintain that neither services nor taxes are likely to change much in the short run, but in the long run, they say, the proposed government would be better prepared than our current structures to deliver services where they are needed and that those receiving the services would pay taxes commensurate with those services.
So, how much would it cost?
There is no simple answer. It depends on what you assume residents might ask the new government to do. If residents ask for city-like services in outlying areas, clearly this would increase costs.
A consultant hired by the freeholders, working with a set of assumptions along this line, suggested that if the public were to demand urban service levels for 80,000 residents currently outside Spokane city limits, the new government might cost as much as $20 million per year more than the present governments.
However, it is equally possible to assume that the new government won’t make significant changes in current services. In this case, the cost of government is likely to change little, if any.
It’s also possible to assume that there could be long-term savings from consolidation of similar or duplicate City and county departments.
These are all ultimately only assumptions. The real cost and tax picture would be determined by the new Council, Chief Executive and the wishes of residents.
The bottom line
Most people want to decide about the charter based on cost. While this is a natural reaction, it may not be the right question.
A better way to consider the question of cost may be: Is one structure designed to be more accountable in its use of our taxes than another? Could one structure deliver services more efficiently than another? Is one structure better than another in assuring that those who actually receive services pay the tax bill that supports those services?
xxxx Marshal Farnell, director of administrative services, Spokane County Pete Fortin, director of finance and internal services, City of Spokane Sue Kaun, freeholder Mike Senske, freeholder Steve Worthington, freeholder
This sidebar appeared with the story: WHITE PAPER TOPICS This “white paper” on city-county consolidation is one of eight written for the Citizens League of Greater Spokane by members of the organization’s board. All eight are available at city and county libraries, and at Spokane community centers. Here are the white paper topics and authors: Taxes and costs, by Tom Agnew. Government structure, by Chris Venne. Political representation, by Linda Sharman. Impact on small towns, by Chris Wright. Impact on neighborhoods, by Terren Roloff. Opportunities for citizen involvement in government, by Chris Marr. Impact on government services, by Dean Moorehouse. Impact on land-use planning, by Chris Hugo.