Spokane County budget shift won’t affect roads department, officials say

Spokane County officials want to be clear: The roads department isn’t losing any money in 2017.

The Spokesman-Review reported that the roads department will get a $7 million budget increase next year after the county commission approved the county’s 2017 budget Monday. The commission also shifted $5 million in taxing authority from the “road fund banked capacity” to the county’s general fund, which includes spending on courts, the sheriff’s office and the jail.

The move drew criticism from a former county commissioner, and Commissioner Al French said Tuesday he’s received numerous phone calls from residents concerned about how their property taxes will be spent next year.

Officials said they are trying to explain that no money will be taken from the road fund. Instead, the money going into the general fund will come from tax increases.

“It wasn’t road fund money,” Bob Wrigley, the county’s chief budget officer, said Tuesday. “It was road fund tax capacity.”

Washington counties are allowed to raise property taxes 1 percent each year. If they don’t use the full 1 percent, they can “bank,” or accumulate, the remaining percentage and levy it later.

Spokane County didn’t take a 1-percent property tax increase for the road fund for years. That “banked capacity,” or left-over authority to tax, is being transferred to the general fund and will amount to $5 million in revenue next year.

It’s money that could be collected for the road fund, but county officials decided there’s more need for it in the general fund.

“If we didn’t exercise the bank capacity, that money would never go into the road fund,” French said.

It is an unusual move, though. In 2015 and 2016, Spokane County shifted $6.1 million in banked capacity from the road fund into the general fund, but before that it never happened.

Wrigley said counties are using the option more frequently as revenue slides from counties to municipalities. The incorporations of Spokane Valley and Liberty Lake, for example, took away large portions of the county’s sales tax revenue. More recent annexations by the city of Spokane and Airway Heights have contributed to that problem.

John Roskelley, a Democrat who served on the commission from 1995 to 2004, said the county’s reliance on banked capacity revenue reflects poor financial planning. County officials disputed that assessment.

“When John was on the board, it was before the city of the Valley and the city of Liberty Lake incorporated. The county was flush when he was here,” French said. “Roskelley has never had to live under the financial constraints that we have now. We still have the same amount of expenses. We just don’t have the same amount of revenue.”

French said some of the new general fund money will be spent on capital improvements, and some will be used to create a “water bank,” in which property owners buy and sell water rights. The water bank is an effort to ease building permit restrictions under the state Supreme Court’s controversial Hirst decision.

“We’re not using that banked capacity to cover our day-to-day expenses. We’re using it for very specific, isolated, one-time events,” French said. “And our hope is that next year those one-time events won’t be there.”

The remaining banked capacity money will be used to raise the leftover balance of the general fund.

“That’s what keeps our bond rating up,” French said. “The reason why that’s important is, the higher our bond rating, the lower our interest payment that we pay on any of our debt.”

French and Commissioner Shelly O’Quinn also approved a 1-percent increase in general fund property taxes, and they channeled $1.3 million in banked capacity into the road fund. Commissioner Josh Kerns, who was sworn in last week, voted against the tax increase.

Only residents in unincorporated parts of the county pay property taxes for the road fund, but all county residents will contribute to the $5 million being transferred into the general fund, Wrigley said.

French and O’Quinn said they won’t approve a banked capacity shift next year because the roads department will need a portion of that revenue. Roskelley suggested it won’t be easy to maintain the general fund without it.

“That’s all well and good that they said that,” he said Tuesday. “But will they? Not if they spend the money and they need it again.”