Valley staff offers up 6 percent utility tax

The Spokane Valley City Council has an assignment for citizens – read the city’s six-year financial forecast and find a way to make ends meet.

Because, as it appears now, the only way the city can offer citizens basic services is to impose a utility tax starting in February.

“I encourage people to give us a thoughtful alternative,” Councilman Dick Denenny said. He called for people to “take the real time to look at the budget … and say ‘This is where I recommend you can cut,’ not just say, ‘I know you can cut.’ Those open statements do good for nobody.”

The council heard opposition to the proposed 6 percent tax from citizens and from utility representatives at its meeting Tuesday after the staff introduced an ordinance that would enact the tax.

Dan Villalobos, marketing manager of Inland Power & Light, told the council that the average household pays $960 a year for electric service, so would pay $60 a year in taxes on that bill.

“Sixty dollars may not seem like much to some, but there’s a lot of low-income people and people on fixed incomes who will really suffer from this tax,” he said.

The city also would tax garbage service, natural gas, stormwater and water utilities.

The city’s six-year financial forecast shows expenses increasing at a rate of 6 percent to 8 percent a year with revenues growing just 1 percent. In 2006, the city is expected to face a deficit of $5.5 million and in 2010 that hole grows to $14.5 million.

Without more revenue, that will mean drastic cuts in services in 2006, the city’s staff says. For example, the money for snowplowing, fixing potholes and doing other street maintenance would drop from $2.2 million to $600,000 between 2005 and 2006.

The 6 percent tax would generate about $6 million a year.

An oddity in the proposal caused concern among some citizens Tuesday. Fifteen different water providers operate in Spokane Valley, while most cities have one or two or provide water service themselves.

Four of those 15 water providers are “municipal corporations,” according to preliminary research by the city’s attorney. As such, they are on equal footing with the city under the state law, and equal governments can’t tax each other.

So, while some citizens would pay a tax on water, customers of East Spokane Water District 1, Hutchinson Irrigation District, Irvin Water District 6 and Vera Water & Power probably would not.

Coincidentally, Spokane Valley Mayor Mike DeVleming works for Vera, prompting a representative of Modern Electric Water Co. to speak out.

“I’m not saying this as anything against you, but you working for Vera, there may be a conflict of interest and an appearance of fairness problem,” said Mike Baker, Modern’s general manager.

There’s also a question of competition. Vera, for example, provides water for Wal-Mart. Citizens questioned the fairness of taxing other department stores thousands of dollars a year while their major competitor gets a break.

Taxing utilities is common in other cities, and Spokane’s rates are much higher than what’s being suggested in Spokane Valley. Spokane charges 6 percent on electric, gas, telephone and cable, and 17 percent on water, solid-waste collection and wastewater collection and treatment.

Cities only are allowed to tax up to 6 percent on utilities they don’t own. Spokane owns the latter three utilities, so it can charge more. Spokane Valley doesn’t own any of its utilities.

At least one citizen supported the proposed tax Tuesday. After shopping for Halloween costumes with her daughter, Kristin Percival told a reporter taxes are “part of living in a city.”

“You’ve got to get the money somewhere,” said Percival, 38. “I don’t want to pay more taxes, but if that’s what it takes … “

She said she’s willing.