City rejects proposed property tax increase

After weeks of the discussion, the Spokane Valley City Council voted Tuesday to kill a proposed 1 percent property tax increase for 2013. The decision will save residential taxpayers about 76 cents per year.

Not collecting the additional $108,000 means that the city’s estimated revenues will be only $33,000 over projected expenses in 2013. Finance Director Mark Calhoun told the council that he recommended the city collect the tax. The city doesn’t have control over revenues, he said. “All of these are estimates,” he said. “It’s still an unknown.”

If the city continues to not take the annual 1 percent tax increases allowed it would lose $5.9 million over 10 years, he said. “We’ve left that behind forever,” he said. “We can’t go back and get that.”

Some council members had questions about what “banking” unused property tax increases means, asking if it meant the city could collect this year’s $108,000 somewhere down the line. All banking means is that the city reserves the right to tax up to the maximum of $1.60 per $1,000 in assessed home value, Calhoun said. “The $108,000 is gone forever,” he said.

Those who voted against the property tax increase said the size of the increase didn’t necessarily matter. “It’s not the time to raise taxes,” said Councilman Arne Woodard.

The city will still have $17 million in its ending fund balance at the end of the year so any tax is difficult to consider, said Councilman Chuck Hafner. The money collected would be “very minimal,” he said. “What is that really going to do for us?”

People’s income and property values have been declining, said Councilman Dean Grafos. “Why would we want to take that when we are just starting to get some momentum?” he said.

Four people testified against the property tax increase either in person or via email, including a resident of Colbert. Taxpayers are being squeezed by high gas and food prices, said Planning Commissioner Rod Higgins. “Just because we can do something doesn’t mean that we should,” he said.

Councilman Ben Wick said Spokane Valley’s tax rate is ranked 222nd out of 281 Washington cities. It is 14th out of 17 cities with populations greater than 60,000. The city has a lot of projects coming up and animal control costs are still unknown, Wick said, so the property tax revenue could be important. The city also lost a significant amount of state shared revenue this year, he said.

“We don’t know what the upcoming year is going to do to us,” he said. “I see a lot of potential dark clouds over our heads.”

Mayor Tom Towey said he talked to many citizens about the proposed tax and learned they were more worried about what the city would do with the money than the tax increase itself. He proposed collecting the property tax increase and dedicating it to street preservation. Every dollar the city spends now on street preservation will save it $8 on street reconstruction later, he said. If the city were to lose $5.9 million in property tax revenue over 10 years that could equal $47 million in lost road projects, he said.

“If this council is serious about street preservation, I think we should take that $108,000 and put it toward street preservation,” he said.

At the end of the discussion only Wick and Towey voted against the proposal to set the 2013 property tax increase at zero.

In other business, the council voted unanimously to approve an interlocal agreement with the Spokane County Library District. The agreement governs what would happen if the city decides to purchase land at Sprague Avenue and Herald Road from businessman Jack Pring. The district will buy between 2.5 and 3.5 acres of the land from the city for a new library and the city has discussed using its share of the 8 acres to expand the adjacent Balfour Park.

The agreement, which has already been approved by the district, states that the two entities will develop a joint site development plan and will share the cost of frontage improvements. If the library fails to pass a bond to pay for the new library within five years it would sell its share of the land back to the city for the same price it paid for it.