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Editorial: Property tax pledge for fire, police carries financial risk

Thu., Aug. 7, 2014

The 1 percent property tax increase Washington cities and counties can impose without a vote of the people has been a handy pressure-relief valve when City Council members and county commissioners could not – or said they could not – cut spending to match revenues from the existing levies.

The city of Spokane has taken that 1 percent increase every year for at least the last decade.

Mayor David Condon and the Spokane City Council are opening that valve again, but not because they have failed to exercise budget discipline.

On the contrary, the preliminary 2015 budget unveiled Tuesday stays comfortably within projected increases in sales and property tax revenues generated by the recovering economy. The structural budget imbalance created when spending commitments exceed projected revenue has been eliminated.

Money from the 1 percent property tax increases will be dedicated to the purchase of fire and police equipment using an unconventional method of selling bonds to the city’s investment pool, with proceeds from the property tax levy and other matching city funds dedicated to repaying the bonds: The city will borrow money from itself.

The bonds would be issued as the city buys fire engines, patrol vehicles or other public safety gear.

The Fire Department would get $17.5 million, the Police Department $8.5 million. The Police Department has added 25 officers and plans to train and hire more, some of whom will be deployed in new precinct stations where they will be closer to the people they are protecting. Bonds would pay for the precinct stations and patrol vehicles, which have been purchased intermittently out of city operating funds.

The Fire Department has not made any significant purchases of equipment since voters rejected – barely – a proposed bond for those purchases in 2009. The last bonds for fire equipment and stations were approved in 1999.

Trucks bought with that money are near the end of their service life, and the department is moving toward new ways of responding to medical emergencies that can be handled with SUV-like vehicles, not trucks.

There is a potential flaw in this financial package.

The city would buy the equipment over the next five years. Bonds with 10-year terms would be issued as purchases are made. If future councils choose not to continue raising the 1 percent property tax increases, money to maintain debt payments will have to come out of other spending.

The present council has agreed to raise the levy only through 2016. The mayor preferred a commitment through 2019.

Condon says he is absolutely confident the budget reforms he and the council have undertaken will allow the city to operate without the net the property tax has provided. They and their successors may have no other choice.

The 1 percent bumps in property taxes can be made without voter approval, but a future bailout should the city’s economy and finances go south will require a vote.

The equipment needs are obvious, but the city should not shop like it’s an emergency.