Key decision point approaching for major Spokane tax hike proposal

Spokane city leaders have less than a month to decide whether to return a major tax increase, meant to fill a massive budget hole and increase public safety funding, to the November ballot.

The City Council has until early August to approve a measure for the November ballot but likely only effectively has until July 22, the last council meeting scheduled before the body takes two weeks off.

Whether the levy lid lift ends up on that ballot and how it will compare to the proposal originally put forward in April remains to be determined in the coming weeks, Mayor Lisa Brown said in a brief interview Thursday.

In April, a proposal by the Brown administration to raise roughly $38 million each year in perpetuity, costing property owners an extra $1 per $1,000 of assessed value, was scheduled for the August ballot. However, as the administration was reportedly facing opposition and confusion, that measure was pulled from the ballot less than two weeks later.

Pitched as a “public safety levy,” it would have raised around $228 million over the next six years, for example, and over that period Brown had recommended spending roughly $40 million of that to expand the services provided by the fire department, another $40 million for the police department and another $12 million on other issues related to public safety.

Complicating the pitch to voters, around 60% of the funds raised by the levy would not initially have gone to fund new or expanded services, but instead backfill a massive and growing hole in the city’s budget inherited by the Brown administration. The deficit in the $243 million general fund, which holds the city’s most flexible dollars that pay for, among other things, the police and fire departments, is currently projected to be $20 million to $25 million in the red going into 2025.

The deficit across the city’s entire $1.2 billion budget is even higher, estimated to be closer to $50 million.

As the city is legally required to pass a balanced budget, the deficits must either be addressed by deep cuts, higher taxes or some combination of the two.

Since May, the Brown administration has asked most city departments to identify cuts of up to 10% per department that may need to be enacted if the city doesn’t significantly hike property taxes. That latter budget exercise has identified as much as $22 million in cost savings in the general fund, though that number is not final as the administration determines which cuts may not be worth the savings, particularly for smaller departments, said Matt Boston, the city’s chief financial officer.

Most departments outside of the general fund also had to identify up to 10% in possible cuts, though these cost savings are more complicated, Boston noted. Departments within the city’s enterprise funds, which include such items as city utilities and make up $386 million of the overall budget, are self-funded through user fees, not taxes, so cuts need to be more surgical to avoid reductions in services that will also reduce the fees collected by the city.

Some other cost-cutting measures are happening immediately, and City Hall already projects that it will end this year $500,000 under budget – a drop in the bucket compared to the deficit the city faces in its next budget cycle, but a noted improvement after years of heavily dipping into savings. The city announced further cost-saving measures Thursday, including an agreement with the unions representing police department employees to offer voluntary retirement incentives for up to 25 people, likely in lieutenant or captain roles, according to department spokeswoman Julie Humphreys.

Department leadership hopes that this and other cost-saving measures could help the city avoid layoffs, interim Police Chief Justin Lundgren noted in a statement Thursday. In April, Brown suggested that without higher taxes the city could be forced to lay off 50 police officers and 30 firefighters, plus an additional 70 employees across other departments.

City leaders hope in the coming weeks to finalize their next steps in this delicate balancing act, Brown said Thursday. Until then, the size and timing of a future tax ask remains undetermined.

Meanwhile, that uncertainty continues to have ripple effects elsewhere. Spokane Public Schools likely won’t place a bond on the November ballot, with officials and board members voicing concerns Wednesday about the school’s tax ask appearing on the same ballot as the city’s.

The same concern, that voters may balk at too many proposed tax increases all at once, has also caused repeated delays to a 20-year levy in support of Spokane Parks. That levy called for raising $225 million over 20 years, roughly $4.5 million per year, to pay for three new parks and more than 30 new playgrounds, along with major investments in parks throughout the city.

Originally slated for the February ballot, that tax ask was first punted to August, as some on the City Council fretted that the sizable levy could poison the well ahead of the larger tax increase needed to avoid sweeping cuts to city departments. When the “public safety levy” was placed on the August ballot, the parks levy got punted again, this time to the February 2025 ballot.

Conversations about the size and scope of that future parks levy continue, said Garrett Jones, Spokane’s director of parks and recreation and interim city administrator. It has not been determined whether the parks levy would be delayed yet further if the city’s larger tax ask is itself pushed to February or later, Jones added.