Some answers about request to raise taxes
Taxes? I thought you said no new taxes!
On Sept. 14, you will be asked to vote on a measure to increase property taxes by 21 cents per thousand dollars of assessed valuation. The measure has a sunset provision that will end the tax in six years (2011). The money will be used only to pay for curb-to-curb paving of streets that require resurfacing because of new sewer line construction. What follows are a few of the questions I have heard about this measure, and what I hope are appropriate answers.
Q. After all the promises about no new taxes, why is the City Council now asking the voters to approve a new tax?
A. When the Boundary Review Board estimated the new city’s revenue stream, it made some assumptions that did not prove to be accurate.
First, they assumed our sales tax base would increase by 4 percent, each year in 2002, 2003 and 2004. In fact, it appears sales tax revenues fell in 2003 and have only increased about 1.5 percent in 2004. In defense of the Boundary Review Board, its ability to identify businesses within our borders was limited. Neither the state nor the county kept records that specifically isolated retail-tax paying establishments within our city borders. Therefore, another assumption of some 5,500 retail establishments has proven to be several thousand fewer than that larger number.
All this means that our $16 million in forecast sales tax revenue for 2004 will actually be closer to $12 million. The bottom line is that the best and most sincere effort to accurately predict the city’s revenue stream missed the mark by a wide margin. The reality is we are collecting a lot less than expected.
Q. Why can’t the city cut costs enough to make up the difference?
A. The first question is, where do we cut the costs? Not including the seven council members, we have a staff of 47 people. That is less than one-third the number of employees of any other city of equal size in the state of Washington. The salaries and benefits for all personnel represents 7.3 percent of our total 2004 budget of $49,313,947 and 13.09 percent of our General Fund budget of $25,054,655.
When we incorporated, we citizens agreed to be a contract city. That means we use county and private sector vendors to provide an extremely high level of service to our citizens. So, again, where do we cut?
Do we privatize the library services? Given no reduction in service levels, could we use the savings to fund the shortfall in sales tax? No we cannot. The library services are funded through a levy on our property taxes. Any such levy must be used only for library services.
Do we reduce animal control costs? Maybe. If the county cannot reduce the $1,000 per day cost to the city to pay for animal control, we may have no choice. However, we have committed to giving SCRAPS enough time to get people to license their pets so their effort can be self-supporting. Do we pull the rug out from under their feet and renege on our commitment?
Do we reduce our police contract? That will mean fewer police officers on the street.
Do we reduce our contract for road maintenance? Remember, we tried that. Immediately, the county commissioners threatened to cancel our entire contract with them if we did not agree to do all the work they thought was required on our roads. We will continue to be as frugal as we can in negotiating contracts and keeping our personnel costs down. However, if we are to maintain the same level of services you rightfully expect, there are not enough savings to be garnered by such efforts.
Q. How did the county pay for the curb to curb paving before incorporation?
A. The county receives $1.81 per thousand dollars of assessed property values for a road tax from properties in the unincorporated areas. That tax is to be spent only on road-related costs. The city is not allowed, by state law, to collect a road tax. Instead we collect $1.60 (plus $.50 for library use only) per $1,000 of assessed value to pay for everything the city provides.
The county paid for the curb-to-curb paving with the road tax money and a tax collected to pay for the Septic Tank Elimination Project. The Septic Tank Elimination Project pays for covering the hole made by the sewer pipe excavation. The deeper the hole, the wider the road surface that must be replaced; thus the more the project pays for. However, for those streets where only a portion of the street is repaved to cover the excavation hole, the county used a portion of its road tax revenues to complete the curb-to-curb paving. That amount equals about $1 million per year.
Without the ability to replace the county road tax, we do not have enough funds to pay for the curb-to-curb paving project. At $.21 per thousand dollar of assessed value (on a $100,000 home value, that is $21 per year), the city will collect just under $1 million per year for the repaving effort. It is interesting to note that the county has recently reported it is about to exhaust the reserves it accumulated to maintain current levels of service. They have asked for a sales tax increase as result.
Q. What happens if the voters vote no on this measure.
A. The concept of local government being responsive to the will of the people will be confirmed. However, it is important that all of us understand the consequences of a no vote. The practice of repaving newly sewered streets from curb to curb will stop. We will only be able to resurface the area required to cover up the excavated hole caused by the sewer construction. The “patch” will eventually undermine the integrity of the rest of the street surface.
It may take several years, but eventually the entire street will need to be repaved. Does that sound like a problem the city of Spokane is facing? Our history of having the best-kept streets in the county will be just that, history.
This city needs your yes vote for this measure. If you have questions, call us at 921-1000 or send us an e-mail via our Web site at www.spokanevalley.org.