Mayor: Tax hike can go

Spokane Mayor Dennis Hession said Wednesday that he will not ask voters to extend the two-year property tax boost that helped prevent drastic cuts in city services.

Administration officials say the loss of property taxes – about $4 million – will not cause the kind of disturbance in 2008 that was forecast in 2005 if citizens hadn’t authorized the tax.

That’s partially because of a robust economy that brought in about $8 million more than expected last year. They say it’s also because the city is pursuing several recommendations in an efficiency study released in January. That report detailed numerous ways to save money, including job cuts.

“We are being fiscally responsible for how we spend our money,” said Hession, who is up for election this year.

But Councilwoman Mary Verner, who leads the city’s finance committee and is considering a run for mayor against Hession, said the mayor’s announcement is premature. She pointed to forecasts that indicate the city will spend more than it collects despite the recent strong economy.

“I had no idea that our fiscal position was so rosy,” Verner said. “I’ve not yet been reassured that we can afford to take these steps.”

She said she’s concerned the loss of the extra taxes could lead to a “significant cut in service.”

Hession says the long-term gap in future budgets can’t be solved overnight or with “short-term solutions” like attempting another two-year tax boost. He said the city will negotiate with unions in hopes they will agree to pay more for their benefit packages.

“We have a plan for reducing (the gap), it’s just that it will take time,” Hession said.

Joe Cavanaugh, president of Local 270, said the union will work with the administration in good faith but said the mayor hasn’t kept the union informed about the budget, his goals or his intentions. Local 270 represents about half of Spokane’s city employees.

“You don’t start negotiations by going to the press and announcing, ‘These are the things we’ll do, and we’ll go to the unions for concessions.’ “

In 2005, city and other leaders persuaded voters to boost taxes for two years to help solve financial shortfalls at city hall. That “levy lid lift” generated about $3.5 million extra in 2006 and is expected to generate about $3.8 million extra this year, said Spokane’s Chief Financial Officer Gavin Cooley.

City officials at the time argued that they needed to raise property and utility taxes to help them save as many as 60 firefighter and police positions. Voters approved the measure a year after shortfalls forced the city to ax dozens of city jobs.

Hession also said he supports reducing the utility taxes that were raised in 2005.

Spokane ended 2006 with about $11 million unspent, Cooley said. About a third of it resulted from spending less than budgeted. Another large chunk came from an unexpected 12 percent boost in sales tax collections.

Cooley said the city considers the leftovers from 2006 as one-time money to mostly put in reserve or spend on programs that will save the city money in the long run.

“It gives us a resource to plug” the gap temporarily, Hession said. “We do not want to use that money to imbed additional costs.”

If the levy lift was in place for 2008, the city would generate an extra $4 million, Cooley said. Without it, the city will collect the dollar amount it got in 2005, plus 1 percent a year and an amount for new construction. After all the numbers are considered, the city likely will collect about $3 million less in property taxes in 2008 than in 2007, Cooley said. Most property owners will likely see a reduction in their city taxes in 2008.

Had the city pursued a new levy lift, Spokane could have generated significantly more than the last time. That’s because tax collections usually are based on the amount collected the year before. But in the first year of the lid lift, they are calculated as a percentage of property value – and property values have grown tremendously since the 2005 vote.

The City Council could put a levy lid lift on the ballot if it mustered enough votes to override a mayoral veto. But that appears unlikely. Some, like council members Brad Stark and Al French, said the mayor’s announcement, which was made in a news release late Wednesday, seemed overblown.

“The levy lid lift wasn’t supposed to be a permanent financial commitment to the city anyway,” said French, who is challenging Hession for his job. “The news would have been if he was going out to reauthorize it again.”

Councilman Rob Crow called Hession’s announcement “fantastic.” He added that if new information changes the picture, officials could always reconsider.

“It’s a sign of the strength of the economy and of the fiscal responsibility of this and previous councils,” Crow said.