City Council delays vote on tab tax

Motorists in Spokane soon could have to pay an extra $20 a year to license their vehicles.

But a final decision on whether to impose the local tab tax was delayed Monday by the Spokane City Council to wait and see if city’s largest employee union will agree to budget-balancing concessions being sought by city leaders.

“I don’t feel comfortable asking taxpayers to pay money out of their pockets in fees or tax increases when our employees are not willing to give up their cost-of-living increases next year,” said City Councilman Steve Corker. Council members will consider the issue again Dec. 6.

City officials say a tab tax would raise about $2.6 million annually by taxing the nearly 130,000 vehicles registered within Spokane. But because the tax won’t be effective for at least six months, the city would receive about half that amount in 2011.

Some City Council members say they’re open to creating the tax and using the new revenue on streets even if the union doesn’t agree to concessions. Councilman Richard Rush asked city administrators during Monday’s meeting about the possibility of contracting out street work.

“There’s only so much putting off into the future and on future taxpayers and future citizens the expense of maintaining or restoring our city infrastructure,” he said.

Although the money raised by the tax must be spent on city street and transportation projects, state law allows cities to divert money currently used on streets from other taxes to other departments – meaning the tax won’t necessarily boost transportation spending.

Council members have yet to decide if other services such as police, fire or libraries would benefit from the tax boost.

City Council President Joe Shogan said if Local 270 of the American Federation of State, County and Municipal Employees, which includes street department employees, refuses concessions, the extra money should be used to replenish the city’s dwindling rainy-day fund.

The city faces a nearly $13 million deficit next year. Spokane Mayor Mary Verner’s proposed 2011 budget calls for the elimination of 120 jobs, 70 of which are filled. Fourteen of those jobs are in the street department. Verner has said layoffs could be avoided if unions agree to give up their 2011 pay raises and pay a higher share of their medical benefits, but no unions have yet agreed to do so.

The City Council earlier this year endorsed Verner’s strategy of across-the-board cuts and allowing each city union to avoid layoffs if they agree to her proposed concessions.

State law allows cities to create Transportation Benefit Districts that can impose tab taxes up to $20 per vehicle without seeking voter approval. The council voted last month to create the district. When the council discussed the proposed tax on Monday, it technically was acting as the “Transportation Benefit District Governing Board.” It has the same membership as the City Council, but its decisions can’t be vetoed by the mayor.

Car owners in eight other Washington cities, including Seattle, Edmonds and Prosser, currently pay a $20 local tab tax.

Verner has said she would leave the decision about the tab tax up to the City Council and has not taken a formal position on it. However, she signed the law last month that created the district, setting up Monday’s decision on the tax.

In an interview before Monday’s council debate, Verner suggested it may not be best to use the money to pay for city employees because the tax isn’t necessarily permanent. She suggested that it might be better to spend it on construction projects the city has planned within the next six years.

“We’re going to have to have a serious community conversation about how to use the money,” Verner said.