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Utility tax in Spokane Valley would burden business, low-income households

Wed., Nov. 16, 2016

Read their lips: No new taxes – and watch out for those potholes.

Spokane Valley takes pride in its streets, but maintenance may suffer if the city continues to rely on a 6 percent landline utility tax to fund pavement repairs, traffic signs and signals, and snow-plowing. The state kicks in gas tax money.

The Spokane Valley City Council is considering a shift to a utility tax applied to services – water, sewer, solid waste, electricity and natural gas – that are not going the way of the 20th century.

Conservative Valley residents bristle at the mention of taxes, but there’s no getting around street maintenance costs escalating as material and labor costs rise.

Here’s a little history:

After its incorporation in 2003, the new city maintained its streets using $8 million rebated by Spokane County. Extension of sewer services also left behind miles of new pavement.

But by 2009, with the street fund facing a $2.1 million deficit, a reluctant council imposed the utility tax. The city collected $3.1 million that year, but projected revenue for 2017 is $2.2 million, $700,000 short of planned spending.

Returns have plunged because cellphone service has become the dominant means of voice communication, plus texting and other services. Really, declining reliance on landlines was obvious by 2009.

The city has backfilled the shortfall in utility tax revenue with funds from excise taxes on real estate sales. But that money had been used to match state and federal grants that return $5 for every local $1. The city will have to take a pass on future grants if no match is available.

With talk in Washington, D.C., of massive new spending on infrastructure, a shortage of matching funds could not be more untimely.

But many Valley residents feel blind-sided by the new tax plan which, although discussed in council budget workshops as far back as March, did not come to their attention until Valley utilities sounded the alarm.

Businesses, though, could be most affected as the utility tax burden shifts to big energy users, from groceries to heavy industry.

Kaiser Aluminum, for example, consumes huge quantities of electricity and natural gas. How many telephones do you suppose Kaiser needs?

Low-income residents, many living in poorly insulated homes, may also pay more.

There may be another path here, but not one that will make the need for additional street funds go away.

For eight years, the council has chosen not to impose the one percent property tax increase allowed without a vote. Putting those “banked” increases into the budget would generate an additional $550,000; perhaps enough to make street ends meet.

Another alternative is gradual imposition of the utility tax, or exempting some services.

Forget telephones. If Spokane Valley wants to keep its fine streets, the council must find another way to roll.