City Council OKs property tax cut

City property taxes are dropping in Spokane.

The Spokane City Council on Monday unanimously approved a 9 percent decrease in the amount it will collect next year.

The cut was expected because a temporary, two-year tax levy boost approved by voters in 2005 is expiring, and city leaders decided against seeking a renewal.

The 2008 tax collection will revert to what it was two years ago, plus 1 percent increases each for 2006, 2007, and 2008, and an amount for new construction.

How that is reflected on individual tax bills depends on how a person’s property value has changed relative to other properties in the city.

Mayor Dennis Hession said his proposed budget, which will be considered early next month, is sustainable even with the tax dip. He attributed the ability to lower taxes to “a combination of responsible and conservative budgeting.”

The City Council debated the issue for a few months but allowed the extra tax to run out without bringing it back to a public vote. Two City Council members, including Mayor-elect Mary Verner, argued that debate on the tax was cut off too soon, especially considering deficits expected within a couple of years.

The end of the boost will allow sales taxes to eclipse property taxes as the city’s top revenue source. Spokane’s Chief Financial Officer Gavin Cooley said 2008 will be the first time that’s happened, at least as long as anyone remembers.

Cooley said the flip is the result of the 1 percent property tax cap approved by state voters in 2001 along with strong sales tax revenues the past two years.

Earlier this month, the Washington State Supreme Court tossed out the 1 percent property tax cap, which meant the law reverted to the cap that existed before – the rate of inflation or, if approved by a supermajority of council, up to 6 percent. Lawmakers are expected to reinstate the cap during a special session next week.

Hession said the court’s decision was discussed, but there was no consideration of asking for a higher-than-1 percent increase for 2008.

Still, city officials plan to “bank” the amount that could have been collected – allowing them to increase taxes at a higher rate in the future.