Utility tax workshop presents new approaches, no change
9/11/2013 11:16:42 AM
By Craig Howard
After squeaking by as a quorum, the Liberty Lake City Council emerged with the status quo at Tuesday night's utility tax workshop.
While not signifying the final word on the tax in the 2014 budget, the discussion over the toll on cable, phone, electric, gas and garbage bills did not muster enough debate to shuffle the standing 3 percent rate that has stood since the beginning of 2012. Still, residents should stay tuned, according to Council Member Dan Dunne.
"Will there be a change? The budget discussions will reveal that," Dunne said following the meeting.
In addition to light attendance in the chambers at City Hall, the dais also featured its share of empty seats on Tuesday with Council members Josh Beckett, Cris Kaminskas and Shane Brickner missing the workshop with excused absences. Beckett and Kaminskas have been among the most outspoken opponents of the tax, both advocating for its removal on the grounds that it was installed as a temporary revenue source at a time when the city was facing budget challenges.
"It's difficult to say what they would have supported tonight," said City Administrator Katy Allen, when asked how the conversation would have been different with a full quorum.
Finance Director RJ Stevenson did provide an overview of various alternatives to the 3 percent scenario, each resulting at or near the amount of $662,000 projected as the overall revenue from the tax in 2013. At the council retreat on Aug. 11, a majority of the governing board approved the amount remaining at $662,000 for 2014. All funds from the utility tax are currently designated for the city's street maintenance program.
"We want to identify different ways to get to that $662,000," Allen said.
One option would reduce the rate on gas to 2 percent and increase the phone rate to 3.5 percent, generating $663,000 for 2014. A second version lowers the gas to 1 percent while transitioning cable and waste management to 4 percent and 5 percent, respectively. A third scenario would involve zeroing out the gas rate and moving cable to 5 percent and waste management to 6 percent.
As part of evaluating a potential shift to the utility tax terrain, Stevenson said the city has been talking with representatives from Avista about projected growth and any possible rate increases on its end. He added that a mild winter and a drop in Avista gas rates have essentially balanced out any revenue increase based on the growth of the city.
The final two options would drop the rates paid for both gas and electricity – a move championed by the local business community. The first would put margins for both power sources at 2 percent while hiking cable and phone to 4 and 5 percent, respectively. The final format would zero out gas and drop electricity to 1.5 percent while placing cable and phone at 6 percent and waste management at 4 percent.
"The last option makes a lot of sense from a business standpoint," said Theron Rust, real estate manager for Liberty-Lake based Huntwood Industries, who addressed council on Tuesday. "Staying in business is still a challenge for anyone. We're just trying to keep everything going, support our employees and pay our taxes."
Rust, who acknowledged that city leaders "do not face an easy task" in the utility tax debate, said Huntwood accounts for more than 6 percent of the entire amount paid to the city annually through the utility tax, or just under $40,000.
Council Member Keith Kopelson expressed concern that the options which significantly lower power rates would unfairly favor businesses while adversely affecting the average citizen.
"It seems to me that the majority of residents who object to the utility tax are from big business," Kopelson said. "With some of these options, it looks like we're shifting most of the burden to the citizens. I lean toward leaving it at 3 percent across the board."
As far as any potential change to the rate structure, Stevenson pointed out that the timing of any council decision would be important to have the new fees effective by Jan. 1, 2014. The city must provide a 60-day notice to utilities before the altered rates take effect.
Dunne voiced support for the option that would drop gas to 1 percent while moving waste management to 4 percent and cable to 5 percent. He said the phone rate should remain the same because "call centers are a big part of the city's commerce."
Council Member Lori Olander, who hosted her own utility tax workshop in July, expressed hope on Tuesday that council might still address the possibility of lowering the tax altogether. Allen said the governing board would have an opportunity to adjust the revenue baseline during budget talks.
"If you don't want the $662,000, you can address it in the budget process," Allen said. "That's when you'll be voting on a specific number."
Council is scheduled to convene at City Hall next Tuesday, Sept. 17, at 7 p.m. for its regular meeting.