This year, Spokane Valley residents are shouldering the largest increase in property tax collections in the city’s short history.
By leaving the tax rate about the same while property values rise, the city of Spokane Valley and the town of Millwood will both collect 19 percent more in property taxes this year than they did last year. And they took advantage of a loophole in state law to approve the record increase without first seeking a voter-approved levy lid lift.
Elected officials are quick to defend the move. Mayor Diana Wilhite said she supports collecting as much as is allowed by law during good economic time to create reserve funds for lean years and help balance future budgets.
“That to me is good fiscal policy,” she said.
State laws limits yearly increases to a city’s property tax revenue. Depending on the outcome of a state Supreme Court ruling and bills pending in the Legislature, the cap will be set at 1 percent to 6 percent more than the highest amount collected in years past, excluding money from new construction. But cities are allowed to base that ceiling on years that include taxes they no longer collect.
“It’s kind of an anomaly because of the library,” Wilhite said.
During its first years as a city, Spokane Valley levied an additional $0.50 per $1,000 to fund the Spokane Valley Library. The roughly $2.4 million generated from the library tax now is collected from Valley property owners by the Spokane County Library District instead of the city.
The city’s tax cap is based on a tax year that included money collected for the library. Instead of city revenues permanently going down since the library district now collects that tax itself, city taxes will be the same as in 2005 when Spokane Valley still collected money for the library. In a similar scenario, Millwood is able to collect an unusually large percentage over last year because its ceiling is based on years when it was collecting taxes for fire services that now are handled by Valley Fire.
The result will be an additional $64,000 in property tax revenue this year over last year without town leaders seeking a voter-approved levy lid lift.
“When it’s spread over all the taxpayers of the town it will be of minimal significance,” said Millwood Mayor Dan Mork.
Depending on the value of their property, some residents’ town tax bills will actually go down. Rising property values across town will feed the revenue increase, which Mork said helps keep a 15 percent to 20 percent surplus in each fund in the city budget.
“We do need to stay solvent, and that’s the main concern with the town,” he said.
When they approved the budget last fall, Spokane Valley City Council members also could have decided to reduce the city’s $1.60 per $1,000 in assessed value property tax rate to offset rising property values but opted against it.
“It gave us an opportunity to levy a little more,” said Spokane Valley Finance Director Ken Thompson.
The extra money can help keep Spokane Valley financially healthy, he said. Also, the city faces a potential deficit in its fund for street maintenance in coming years without more revenue or reduced spending in other areas.
If city property tax collections were limited to 1 percent above what they were last year, it would have resulted in about $40 in savings for the owner of a $200,000 house.
Though the increase may seem small when spread over the whole year, a longtime homeowner is quick to point out that the tax burden adds up over time.
“I think we’re paying too much, is what it boils down to,” said Bob Blum, who serves on the Spokane Valley Planning Commission and has written editorials in favor of lower property taxes for the Valley Voice.
“The bottom line should be government should get a little better control of their spending,” Blum said of the numerous public entities that rely on money from property taxes.
The total combined property tax rate from taxing districts within the Spokane Valley ranges from $13.71 to $16.36 per $1,000, with about $1.60 of that going to the city.
Each cent in the property tax rate translates to about $60,000 for the city, which uses it for a variety of services and a growing reserve fund.
“We need to have a savings account within the city” for when the economy slows, Wilhite said.
“That’s the worst time to have to raise taxes to support the level of services you have as a city,” she said.
Over the last few years, the city has built up $5.2 million in reserves to prevent cuts to city services when there is a downturn in the economy, as well as $540,000 for plowing in exceptionally snowy winters.
Spokane Valley will collect about $9.6 million in property taxes this year, according to the Spokane County assessor’s office. That makes up about 30 percent of the city’s general fund.
“We’ve kept the tax rate at the same level since the inception of the city,” Wilhite said.
“I think that we want to continue to operate with that rate for as long as we can,” she said.
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