Getting There: Spokane Valley will weigh new taxes to fund road work

Spokane Valley had a road funding problem in 2008.

City streets were falling apart faster than Spokane Valley was repairing them. If the city wanted high-quality roads in the future, it’d have to start investing millions of dollars more.

So the City Council acted, passing a 6% utility tax that residents paid on their phone bills.

“This may be a stopgap, Band-Aid fix, if you would, but it does serve the purpose,” City Councilman Gary Schimmels said in 2008. “It gets us down the road here for maybe three to five years.”

Cut to 13 years down the road, and in 2021 Spokane Valley still doesn’t have a consistent, long-term road preservation funding source. The city hasn’t come up with anything better than Band-Aids.

Spokane Valley is now spending about $8 million a year preserving and maintaining its 450 miles of road. Busier arterial streets, such as Sprague Avenue, have received the bulk of investment at the expense of neighborhood streets, which make up two-thirds of the city’s network.

City roads are in good shape today, according to the pavement condition index, a 100-point scale measure of a road’s health used by engineers. That puts Spokane Valley in an enviable position compared to many municipalities.

But the $8 million figure, which comes from a hodgepodge of grants, general funds and specific taxes – including the dwindling telephone tax, which now brings in $900,000 a year – simply isn’t enough. Spokane Valley staff say the city has to increase spending to $16 million a year to keep its roads in good condition. For context, the city’s 2022 budget is $108 million.

Doubling road spending might sound extreme, but experts say it’s the fiscally responsible move. Fixing and preserving roads is a lot cheaper than waiting for them to fall apart and completely rebuilding them.

After years without much tangible action, the City Council took a major step this spring toward addressing its road funding shortfall.

The city formed a 22-member pavement dream team made up of business leaders, transportation experts, community representatives and others. The Streets Sustainability Committee’s job was to answer some of Spokane Valley’s most fundamental road preservation questions.

After more than eight months of work, the committee’s 258-page report is in. Armed with the information, the City Council could start considering a new road tax, or taxes, as soon as January.

“We certainly need to jump into this,” City Councilman Rod Higgins said in a Nov. 9 council meeting.

Getting the show on the road

The Streets Sustainability Committee had three specific goals: learn what people think about the Valley’s roads, figure out what quality of roads people want and analyze the city’s long-term pavement preservation and maintenance funding options.

To answer those first two questions, the committee launched a streets survey. They got more than 1,000 responses, a Spokane Valley survey record.

Based on the results, people think Spokane Valley’s roads are in good shape and that keeping them that way should be one of the city’s main priorities.

The city should spend more on roads without slashing spending elsewhere, survey respondents said. A majority of respondents (60%) even said they’re willing to be taxed more, in certain ways, to generate the needed dollars.

“It seemed like people wanted to make investments or additional investments to maintain the streets,” Spokane Valley Mayor Ben Wick said. “I was pleasantly surprised by that, because we’ve been a conservative community that has not wanted to invest more money.”

The committee members themselves considered six different taxing options.

Some of the options don’t have the potential to produce $8 million. For instance, the city has three different ways it could increase property taxes, but all three combined wouldn’t raise much more than $1 million.

That leaves three taxing options with the potential to generate more meaningful revenues.

Spokane Valley could impose a utility tax, likely on electricity usage, with or without voter approval. How much money a utility tax would generate depends entirely on how the city would craft it, but it could raise up to $8.1 million a year.

Committee members liked the utility tax concept third best of the six options. While it has the potential to cover the city’s road funding gap in one fell swoop, it comes with a host of downsides.

Many say a utility tax would disproportionately impact low-income residents and seniors on fixed incomes. A utility tax could also face strong opposition from businesses.

Higgins said some businesses are in the Valley because of the cheap electricity.

“You certainly don’t want to drive them out,” he said.

Wick said he’s not a fan of the utility tax for three reasons.

First, he said he prefers the taxing options that require direct voter approval.

Second, he said utility tax revenues wouldn’t legally be restricted to transportation projects, and a future City Council could use the money for other purposes.

And third, the connection between electricity use and roads is indirect. A new tax for road preservation and maintenance “should have a nexus with transportation,” Wick said.

The two tax ideas the committee members liked best both rely on the creation of a transportation benefit district. Transportation benefit district funds must be used for transportation purposes.

Spokane Valley could create a vehicle license fee, just like Spokane’s. If the city imposed the fee, anyone who registered their car in Spokane Valley would have to pay an additional $20 a year.

At $20 a vehicle, the license fees would raise about $1.4 million. City Council could up the fee to $40 annually after two years and $50 after four years. At $50, the fees would net $3.6 million. With voter approval, the city could charge a license fee up to $100.

Vehicle license fees were the preferred option among the 22 committee members, but a 0.2% sales and use tax was a close second.

Voters would have to approve the sales tax as a ballot measure. If they passed it, sales and use taxes within Spokane Valley – the transportation benefit district – would increase from 8.9% to 9.1%. Sales tax revenues vary depending on how the economy’s faring, but the tax could be worth between $3.3 and $5.9 million a year.

Lance Beck, a committee member and CEO of the Greater Spokane Valley Chamber of Commerce, said he thinks the sales and use tax option is the best by far because the tax burden wouldn’t fall entirely on the shoulders of residents.

“To me, it’s such a clear-cut answer,” he said. “Your level of pain is based on your level of ability to purchase.”

Messaging matters

Diana Wilhite, one of the at-large community members on the Streets Sustainability Committee, emphasized that it’s critical how Spokane Valley pitches any new tax proposal.

“You don’t want to spring something like that on the voting public. You want to give them as much information as you can and explain why you need it,” Wilhite said. “We better give them a very, very, very good reason for why they need to do it.”

Wick shared the same sentiment. He said he likes Cheney’s approach, where the city specifically tells voters which streets it’s going to fix before asking for a new tax.

“I like having that kind of transparency,” he said. “You have to show them what’s in it for them.”

In addition to generating more money for roads, the city’s also going to have to complete a greater variety of preservation projects to make sure it gets more mileage out of its dollars.

There are several different ways to preserve a street. Some cities use chip seals, fog seals and slurry seals for instance, each of which involves slathering a covering layer atop an existing road.

Spokane Valley hasn’t been using any of those preservation methods. Instead, the city has been focusing its efforts on grind-and-inlays, which entail grinding off a few inches of road and inlaying a new layer of asphalt on top.

Grind-and-inlays don’t have the bumpiness or car damage issues sometimes associated with chip seals, but they’re also far more expensive. They can’t be the city’s only option for extending the life of a road.

“Long-term, it’s not sustainable to grind-and-inlay, or rebuild, all your streets,” Spokane Valley Pavement Management Program Coordinator Adam Jackson said in the Nov. 9 meeting. “You can’t afford to do it.”

Higgins said the city will probably use more than one tax. He also said the program will have to be ramped up gradually.

“It won’t be something really swift,” he said. “When we do it, we’re going to have to try something out and see if it fits.”

Based on the survey results, Higgins said he’d expect residents will be in favor of a tax so long as it has a clear purpose.

“The Valley isn’t necessarily resistant to taxes,” he said. “They’re resistant to frivolous spending. If you can prove your point, they’re generally there with you.”

Work to watch for

Late-night drivers downtown will need to watch out for Avista Corp. utility work on Riverside Avenue between Bernard and Browne streets, running from 8 p.m. Wednesday to 2 a.m. Thursday.

The northbound curb lane of Nevada Street between Bismark and Decatur avenues in northeast Spokane will be closed and merged from Tuesday through Dec. 7 for Qwest work.

Single-lane reductions on Euclid Avenue for North Spokane Corridor work have been lifted. The road is fully open.