Two Spokane Valley City Council members say they won’t vote for budget over disagreement on street repairs

At least two Spokane Valley City Council members say they won’t vote for the 2021 budget, saying the City Council needs to find a sustainable way for the city to maintain its streets.

The city has a total budget of about $98 million, and the general fund expenditures are about $47.3 million.

In most areas, the city’s reoccurring revenues are equal to or exceed recurring expenses – except the fund the city uses to pay for street maintenance. The city will need to complete about $4.7 million on pavement preservation in 2021 and the taxes on which the city traditionally depends to cover the costs of street maintenance, telephone utility taxes and gas taxes will not cover the costs.

According to a presentation on the budget given earlier this month by City Manager Mark Calhoun, the city’s utility tax on landlines has declined from $3.1 million in 2009 to a projected $1.4 million in 2021. Gas taxes have also been flat or declining over the years, as people use more fuel-efficient vehicles and drive less. For the past five years, many of the normal sources of revenue have not covered the full cost of street maintenance and the city has had to find other ways to cover the costs.

To make up for lost revenue in street maintenance, the city has used excess revenue from prior years and real estate excise taxes, and the City Council is poised to do the same for 2021.

The excess revenue from prior years was left in the general fund this year to prepare for financial issues caused by the pandemic. Under the current budget, the city would use close to $1.9 million of those excess revenues for road preservation.

Both council members Arne Woodard and Rod Higgins say they will vote against the 2021 budget if the city doesn’t find a sustainable source of revenue to cover ongoing street maintenance costs.

“The general fund should not be paying for roads,” Woodard said. “There’s not a successful municipality in the country that has attempted to get the majority of funding from the general fund.”

Woodard said both real estate excise taxes and excess revenue from past economic boom years should be used on new projects that benefit the community, such as grade separation projects, parks, or to attract larger matching grants from the state or federal government, instead of covering ongoing expenses like road maintenance.

The city of Spokane Valley usually has very conservative estimates on how much revenue will be generated every year and the city has only 95 full-time positions, keeping costs fairly static and low. As a result of those policies, it routinely has extra revenue beyond what is saved to reserves. Since 2013, about $27.8 million of funds that rolled over from that process have been used for one time capital projects, according to the city’s budget.

Both Woodard and Higgins said they feared continually using REET funds, and rollover money could make it difficult for the city to attract large grants in the future.

They also argued taxing a utility like electricity would be more equitable than other types of new taxes, and said they would likely cap it so people under a certain income threshold could have some relief, and cap a maximum payment so large companies that employ many Spokane Valley residents wouldn’t bear too large of a burden. Higgins said he’s hoping members of the City Council can get together in work groups to discuss a long-term solution.

“People have to be part of the solution; you can’t just drop it on their head,” he said.

Higgins and past City Council members brought up utility taxes in 2016, but the proposal faced strong pushback and did not move forward.

Councilman Tim Hattenburg said he agreed the council needs to find a sustainable source of revenue for roads, but said he planned to vote for this year’s budget because it’s too late in the year to pursue a new tax.

“It’s definitely something we need to look at,” he said. “Council members are concerned, and we need a long-term plan to sustain road preservation.”

In the past, Mayor Ben Wick has not supported looking for new revenue, saying if the city has extra funds, it should use what it already has before looking for more.

In an interview Thursday, he said he would prefer to wait until some of the issues caused by the pandemic are resolved before making a new revenue plan, but said he would be open to proposals in the future.

“I’m open to trying to find ways to make sure we can still fund our streets as well as we need to fund them,” he said. “Whether it’s a dedicated funding source, or excess revenues, my priority is making sure we can do the street improvements.”

Council members will have another chance to discuss their options when the budget is presented to them again on Tuesday. There will be a public hearing where the public can also weigh in on the budget.

Spokane Valley lost some tax revenue during the pandemic, but the city’s finances were not as hard-hit as other governments across the region.

The city is slated to spend about $28.2 million on public safety, which is about 29% of its approximate $98 million budget. Public safety includes spending on courts, the jail and the city’s contract with the Spokane County Sheriff’s Office. The Spokane Valley Police Department is staffed by sheriff’s deputies. The Sheriff’s Office contract is about $23 million alone.

The other large expenditures the city will make include $35.5 million in capital projects and $3.1 million on parks and recreation.

The city is also poised to not take a 1% increase in property taxes they are allowed to take under state law. This will be the 12th consecutive year the city council has decided to not increase property taxes. 

The Spokane Valley City Council also will add a homeless services position next year by merging two vacant positions.

The full budget can be read by visiting the meeting and agenda portion of the city’s website and clicking on the 2021 proposed budget link on the Oct. 27 meeting agenda.