As shortfall looms, council eyes revenue sources

The Liberty Lake City Council continued to look at options at its meeting Tuesday to head off an impending budget shortfall.

Administrative Services Manager Jessica Platt explained to the council how budgets in the public sector work. She said the budget serves three purposes: it sets spending limits, it is a legislative threshold for taxing and spending and it is a financial policy tool.

The city has multiple funds and one fund can’t benefit another, she said.

By state law, the city must adopt a budget by Dec. 31 every year, and the city continues to monitor it and make changes for council approval.

She said that in 2009, 79 percent of the city’s revenue came from sales tax and property tax. The other 21 percent comes from state shared revenue, such as liquor sales, investment interest, building permits, fines and forfeitures.

Although she doesn’t have the complete figures from 2010, she estimates those figures would look very similar.

She said that sales tax is an unstable revenue source, since the city has collected 22 percent less than it did in 2008. The city can increase the levy on property tax by one percent every year, but the city hasn’t done that and property values have declined by 26 percent since 2002.

Platt presented the council with options to increase revenue – the city can collect funds from state and property taxes, utility taxes and B&O taxes.

Although Liberty Lake has never collected a utility tax – up to six percent on items such as gas, electricity, telephone and cable services – Spokane, Spokane Valley, Airway Heights and Cheney do.

Platt presented the council with three scenarios to recoup the revenue shortfalls. The first was to impose a six percent utility tax. The second was to impose a five percent utility tax and set up a metropolitan parks district which would include residents in surrounding areas and could collect its own funds for all park costs. The third was to impose a five percent utility tax, set up the metropolitan parks district and a regional transportation benefit district, much like the park district.

The discussion was the council’s workshop discussion, so no decisions have been made. The council also discussed the possibilities of making cuts to current city services.

Mayor Wendy Van Orman said there is a survey on the city’s website to gather the public’s input on services that are important to them.

Beckett said he felt the council is taking the risk of taking too much time to educate the public and themselves to the budget crises ahead of them.

“We need to be ready to make some decisions in the near future,” he said, not three months down the road.

“I don’t think we have three months,” Van Orman said.

Beckett asked the council have something to review in the next meeting or two.

The next Liberty Lake City Council meeting will be held Aug. 17.