City Looking At Options To Replace Tax Revenue

Cheney

The Cheney City Council is facing some tough choices this fall.

The city will lose some $300,000 in tax revenue next year - about 7 percent of its $4.3 million annual budget.

Now, the council must cut city services or come up with tax increases to replace the money. At stake is the quality of police and fire protection as well as parks and street services in this city of about 8,000 people.

The city could lose two police officers and have its fire department converted to a volunteer force, officials said.

“That is a substantial cut,” said City Administrator Jim Reinbold. “We are trying to avoid that.”

City Council members are considering a combination of budget cuts and new taxes.

The problem traces to a tax the city has collected for nearly 30 years from the customers of Cheney City Light.

The city levied a 6 percent utility tax on electrical bills, plus a 6 percent business and occupation tax on the utility for a total tax of 12 percent on electricity.

In the 1980s, the Legislature passed a law ordering a multi-year reduction of taxes on electricity to 6 percent.

A state auditor discovered that Cheney was collecting the higher electrical tax and told the city to cut the tax next year to comply with the law.

Reinbold and members of the City Council’s public works committee came up with four options.

New tax money would be raised by increasing levies on water, sewer and garbage service.

The most expensive option would increase water and sewer taxes from 11 percent to 25 percent and increase the tax on garbage from 6 percent to 15 percent.

That would replace the lost $300,000 and add $120,000 to a special fund for fixing residential streets.

The cost to the average homeowner would be an increase of about $5 a month. The average bill for water, sewer, garbage and electricity is about $105 a month now, and would go to $110 a month under the most expensive plan. Those averages include potential rate increases for 1997.

Two other options would involve smaller increases in water, sewer and garbage service, but also would force the council to cut some city services.

Landlords are opposing the increases in water, sewer and garbage taxes because they might have to pay those increases. Landlords frequently pay a portion of the utility charges, while tenants generally pay for their own electricity.

, DataTimes