Brown backs away from proposed property tax increase on August ballot

A major Spokane property tax increase likely will be pulled from the August ballot to allow time for “additional analysis,” Mayor Lisa Brown’s administration announced Wednesday. .

Within hours, opponents of the measure, including Spokane County Treasurer and Republican congressional candidate Michael Baumgartner, lauded the delay as an early victory.

Some kind of tax increase remains necessary to patch the hole in the city’s budget that Brown inherited, she added. A significant portion of the tax revenue was also pledged to various public safety investments, though with few guarantees for how that money would be spent.

“My commitment to improving community safety has not changed,” Brown said at a news conference. “However, it’s important that the administration and the council go through this midyear budget review process thoughtfully and present a levy to the public that has been thoroughly vetted and engaged with the public.”

The property tax proposal was placed on the ballot less than 10 days ago by the Spokane City Council after Brown unveiled it on April 11.

Brown only informed the council that she wanted to delay a vote on Wednesday, shortly before the public learned of the decision. Police Guild President Dave Dunkin denied rumors that the delay was prompted in part by the union’s opposition to the levy, saying that the union has taken no official position on the issue, though he added that there has been no survey to gauge the support of the department, which may have the most to gain or lose.

“We look forward to getting more details on the levy, and we’ll see what happens in November,” Dunkin said.

Brown added that a “key aspect” of the change of course was conversations she had with people over the weekend that left Brown feeling like the public didn’t understand the tax proposal.

“Frankly, I realized that … we have the time in the city to really engage more deeply with the community, and I think they appreciate that and that it will bring about a better result ultimately,” Brown said. “And … we’re putting forward proposals to the council on efficiencies and potential reductions that the council may or may not take – I think we need to get through that process.”

The mayor denied making a mistake by failing to come to that conclusion two weeks earlier, before the council voted to place the measure on the August ballot and to delay a separate proposed levy in support of city parks. At that April 29 council meeting, the parks levy was delayed to at least February out of concerns that asking for two major tax increases at the same time could harm the chances that either levy passed. Though the larger levy has been delayed, it is too late to move the parks levy back to August.

While Brown said that her administration has made robust efforts to gauge the public’s interest and the city’s needs ahead of that vote, she argued that more time would be helpful.

Conversely, a potential November ballot measure would leave little time for the Brown administration and council to adapt to the results before passing a balanced budget by December.

Brown said her administration was already working on a budget proposal that she could present to council if the levy fails.

That worst-case scenario or some alternative deep cuts would need to be implemented for the 2025 budget if the levy gets pushed to next year.

The ballot measure proposed raising an estimated $38 million each year in perpetuity – the exact amount collected would increase slightly over time – by collecting an extra $1 per $1,000 of assessed value. This would raise around $228 million over the next six years, for example, and Brown has 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 over the next six years.

Complicating the pitch to voters, around 60% of the funds raised by the levy over the next six years would not go 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 mayor’s office has stated it is preparing to announce budget cuts in the coming months, but even then, the general fund deficit is projected to be $20-25 million.

Where exactly cuts would occur if the levy failed is a matter of continued debate. In an executive summary Brown presented to council on April 26, she suggested that the levy failing could result in the layoff of 50 police officers and 30 firefighters, plus an additional 70 employees across other departments.

Political opposition

Baumgartner’s congressional campaign and assorted political allies already planned to hold a news conference Wednesday afternoon to condemn Brown’s levy proposal, but quickly pivoted to taking credit for her retreat from the August ballot.

“It’s a great day for fiscal responsibility and a great day for all of us that think that property taxes are too high and that want government officials to look at other solutions,” Baumgartner said.

Flanked by Spokane City Councilman Michael Cathcart, former Councilman Steve Corker, state Rep. Mike Volz and various other business leaders, property owners and political allies, Baumgartner condemned Brown for considering such a major property tax increase, arguing it would push seniors from their homes.

Brown pre-emptively dismissed Baumgartner’s news conference, arguing it was a political stunt by a candidate who offered no solutions.

Baumgartner proposed no substantial alternatives, instead pointing to a frequent campaign talking point about having taken part in eliminating redundant state agencies during his time in the state Senate.

“I’m wondering which agency he thinks the city should cut, police or fire?” Brown said in a brief interview later in the afternoon.

Figuring out a path forward without major tax increases is the job of the mayor, Baumgartner argued.

“I’m not here to tell you exactly how to balance the budget,” he said. “I’m not running for mayor.”

“Well, I think that is a good thing for the people of Spokane,” Brown quipped.

Cathcart, who was previously critical of former Mayor Nadine Woodward for negotiating union contracts and putting forward budgets that put the city in a hole to begin with, argued Wednesday that Brown has not done enough to look for budget cuts before asking for a major tax increase.

He also argued that the administration should renegotiate the contracts with city unions that are largely driving the current deficit.

More than half of the city’s roughly $240 million general fund is spent on police and fire services, and the costs for those departments has increased over the past four years much more quickly than the city’s revenues.

That gap was initially bridged with now-expiring pandemic relief funds and by dipping heavily into dwindling city savings.

The most significant driver of those increasing costs were contracts with city unions negotiated by Woodward’s administration and approved by the City Council.

For instance, a four-year contract with the Spokane Police Guild, which represents officers and sergeants, was approved in June and included enhanced benefits and annual salary increases of between 5% and 7%.

The budget for the Spokane Police Department jumped from $81.1 million in 2023 to $96 million this year, with the approved contract accounting for a significant portion of that jump.

Those contracts were unanimously approved at the time, including by Cathcart, who said Wednesday that significant compensation increases were necessary to respond to soaring costs of living fueled by the pandemic. Approving those contracts at the time was necessary to avoid losing city employees who could find better pay elsewhere, Cathcart argued, but city employees should now agree to pay cuts in order to avoid layoffs.

Brown said she was in talks with the city’s seven labor unions and union leadership about possible cuts and “efficiencies,” but did not believe the city could legally start formally renegotiating compensation packages outside of a specific schedule.

“The formal renegotiations happen on a published schedule,” she said. “I believe firefighters happen soon; that’s a formal process that occurs.”

Brown would not be the first Spokane mayor in recent history to have to have difficult conversations with city unions about the budget, however.

In 2009, then-Mayor Mary Verner said she had made the city’s budget fully transparent to the unions, “so that they would have no reason to think there would be hidden money anywhere.”

By 2010, she was asking city employees to forgo raises in order to help bridge a budget shortfall.

In some ways, these negotiations and the cost-cutting measures of the following administration may have precipitated today’s problems.

Verner was succeeded by Mayor David Condon, well-known for his hard-line stance on limiting raises for city workers in order to keep the budget balanced. When Woodward came into office, she was faced with growing concerns that city employee wages had fallen so far behind that departments could be hollowed out as staff fled for better pay elsewhere – a situation only intensified during the pandemic and associated inflation.

Now Brown faces a similar dilemma as Verner: balancing the budget without layoffs.