Short-term tax increases urged for city

A citizens’ committee is recommending that the city of Spokane raise taxes by lifting the lid on property tax levies and upping the utility tax, rather than make more cuts in police, fire and library services.

But the panel says the city should only do this for two years, not the six allowed in state laws on the levy lid, as a way of maintaining accountability of city officials. During that period, the city should also seek wage and benefit concessions from city employees as part of a package to help fill an estimated $6.8 million hole in its general fund budget.

Without those changes, “we will see layoffs and reductions, most notably in police and fire,” committee chairman Chud Wendle told the City Council on Tuesday.

The council is expected later this month to approve a ballot measure that will ask voters to lift the lid on increases in the property tax levy. Wording for that ballot measure is likely to be on next week’s council agenda, City Financial Manager Gavin Cooley said.

The tax increases are a short-term fix, Cooley said. For long-term solutions, the panel recommends that the city hire an independent agency to study all city services and eliminate duplication and waste.

Raising the property tax lid would generate about $3.3 million per year, and increasing the utility tax from 17 percent to 20 percent would generate about $2.85 million. Employee concessions would add another $850,000.

With that money, the city budget for 2006 and 2007 would see no reductions in police and fire services or staffing, and would be able to open five branch libraries that are now on restricted schedules for five days a week.

City Councilwoman Cherie Rodgers said, however, the city’s utility tax is already high, at 17 percent, and increasing it would give Spokane the highest utility tax rate in the state.

West Side cities don’t have large utility taxes because they have a business and occupation tax, Cooley said. Spokane stays away from levying that kind of tax to remain competitive with Spokane County, the city of Spokane Valley, and nearby communities in North Idaho, he said.

Rodgers suggested that in return for higher utility taxes, the city could cancel the “rate stabilization fees” the utilities charge to build up funds for future expansion, she said. “There’s a lot of money built up in those accounts,” she said.

She also noted that city officials originally thought the budget shortfall could be handled solely by raising the levy lid. That’s not possible, she said, because property values have not increased in downtown as much as predicted.

“The city will spend $70 million on River Park Square (settlements) and has nothing to show for it,” she said.