Verner budget includes 7 percent spending increase

As state and county leaders brace for significant cuts and painful layoffs, Spokane Mayor Mary Verner plans to raise city spending by 7 percent next year.

Verner has proposed a $156 million budget next year on police, firefighting, parks and other city services. That’s up from a proposed budget of $146 million in 2008.

Much of the new money in the budget comes from a proposal for a new 20 percent tax on sewer and water fees. Rather than pass the tax on through utility bills, Verner wants most of the extra owed taxes – about $4 million – to be taken out of city reserves devoted for future sewer and water projects.

Verner said she proposed the new tax so that all utility fees would be taxed equally.

“What we’ve tried to do now is to be sure that we are accurate in the assessment of the utility tax across the board to all of our internal utilities,” she said. “Had all of the news been bad, I still would have said clean it up, because it needs to be consistent.”

But some City Council members, including Al French and Mike Allen, have voiced concerns about pulling the money out of city accounts aimed at future construction. Doing so, they argue, could mean taxpayers simply have to pay more later so the city can move ahead with sewage treatment upgrades required by the state to meet tougher environmental standards.

Allen said he believes the economy has shifted even further than when the mayor first proposed her budget earlier this month and that the city should cut some spending. Despite his concerns about Verner’s utility tax plan, he said he might support at least some version of the proposal.

“Without having some sort of taxation – revenue coming in for a year or two – it will be a very difficult time to be able to maintain service levels,” Allen said. “I would be more of an advocate of cuts to accompany the additional revenue so it’s not all placed on the burden of the taxpayers.”

Council President Joe Shogan said part of the reason the city can avoid cuts results from decisions leaders made to divert much of the sales tax windfalls in 2006 and 2007 to rainy day funds rather than to new jobs.

Still, Verner’s budget doesn’t call for dipping into those reserves, at least not unless sales tax collections falter further than predicted.

Shogan said Verner’s utility tax plan is important to meet “sound accounting principles.”

But he acknowledges that there’s another benefit to charging the utility tax to previously untaxed fees: “If you can find $3 million to $4 million to plug the gap, go to it.”

Some of the extra money is for a few new positions, such as six new police officers to be hired halfway through next year; much of it is to cover pay increases called for in employee contracts.

Earlier this year, the Spokane City Council voted 5-2 to approve a new contract for the largest city union that increases compensation slightly more than 5 percent next year, including 5 percent raises.

Verner said earlier this month that she remains satisfied with the contract because of medical and retirement concessions the city got in return for generous wage increases.

“We will see the benefits of that long after I’m out of this office, but I feel the responsibility to work on the long-term financial picture at least as much as I do the picture that’s facing me right now while I’m in office,” Verner said.