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Valley City Council rejects raising property tax

The Spokane Valley City Council rehashed some old budget arguments and brought up some new ones during their Tuesday meeting.

Key among them was the continued debate on whether the city should take the allowed 1 percent property tax increase in 2013. Despite arguments in favor of collecting the tax by Councilman Ben Wick and Mayor Tom Towey, the council voted not to. The tax would have collected $108,000. Not taking the tax will save the average homeowner 76 cents per year.

Wick said the people he talked to were in favor of the tax increase after he explained the projects the city is working on, including street preservation. “I’ve not had one person come back and say they wouldn’t support a 1 percent increase,” he said. “There wasn’t a single one of them that remembered we didn’t take it last year either.”

Councilman Dean Grafos, however, said it’s important the council send the message that the city is living within its means.

“You should not take a tax because you can,” he said. “We don’t need it right now.”

Towey pointed out that the city of Spokane postponed several small, incremental water rate increases for years until deteriorating pipes forced them to do a large increase. “That little increment turned into a big bill,” he said.

The current council has blamed the previous council for not dealing with the street preservation funding problem back when the anticipated annual shortfall was much lower, Towey said. He said he was worried that a future council will have the same complaint about this group.

“I don’t think it’s going to be our remedy for street preservation,” said Councilman Chuck Hafner. “Let’s not use road preservation as a scapegoat for passing this 1 percent.”

Councilwoman Brenda Grassel said she would like to see what would happen if the council cut property taxes. “How about cutting 2 or 3 percent out of it?” she said.

Only Wick voted against not raising the 2013 property tax.

The council also had a lengthy debate on a 2013 budget proposal by City Manager Mike Jackson to set aside some of the city’s ending fund balance to help pay for replacement of the Sullivan Bridge, park development, a new city hall and capital projects. The proposal would remove $7.8 million from the ending fund balance, leaving $17.7 million, nearly 51 percent of the city’s annual general fund budget.

Grafos said he was concerned that the changes would make it harder for the public to track the money and recommended leaving the ending fund balance alone. “If we decided we needed the money for the Sullivan Bridge, it would be there,” he said.

“We’re setting aside money but we haven’t authorized any of those projects,” Grassel said. “That’s my concern.”

The council would still need to vote to spend any of that money, Jackson said. “Setting aside those funds does not appropriate that money,” he said.

Council members have previously said the city should set money aside for the Sullivan Bridge and there have been discussions about whether the city should continue to rent city hall space, Jackson said.

Jackson said he was also concerned about numerous policy changes regarding the ending fund balance. First the council decided to spend $500,000 on street preservation. Then they voted to spend 40 percent of the balance above $26 million on street preservation, followed by a vote to spend 100 percent of the balance above $26 million on street preservation. “That is what concerns me is the movement toward spending our reserves,” he said.

“I’ve been on the council from day one,” said Councilman Gary Schimmels. “We’ve spent nine years building these funds. If we keep eating away at the reserves, we won’t even be able to fix the streets.”

Grafos suggested taking the $7.8 million and putting it in one generic capital projects fund. Towey said there is a risk in having a large fund of money that could be cannibalized for other, smaller projects. “We tend to pick at it, slowly but surely,” he said.

Wick pointed out that the city once had nearly $5 million set aside for a future city hall. Since 2010 that has been spent on various projects, including full-width paving of residential streets after sewer installation. The council also voted Tuesday to take $2.5 million from the fund to buy property at Sprague Avenue and Herald Road, reducing the balance to $500,000.

“And they were really good projects that benefited our city,” Towey said.

Woodard made a motion to include Grafos’ suggestion to create a large capital projects fund in the proposed budget, which passed. Towey continued to caution against it. “It’s going to go,” he said of the money. “I think it’s wise to keep it separate. I think it’s wise to name it.”

The final vote on the proposed 2013 budget is scheduled for the Oct. 30 council meeting.