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Council hears overview of utility tax, property tax impacts
10/8/2014 9:38:51 AM

By Craig Howard
Splash Contributor 

Last year, the Liberty Lake City Council once again addressed the utilitarian value of the long-debated utility tax.

The municipal toll on gas, cable, phone, garbage and electric bills was installed at the beginning of 2010 at a rate of 6 percent as a way to stem an anticipated budget shortfall. The rate was lowered to 3 percent in 2012, but still drew detractors around the dais such as former Council members Josh Beckett and Lori Olander, the latter of whom supported the idea of lowering annual revenue from the utility tax at the council retreat last August.

These days, opposition to the tax on the governing board has faded considerably. Olander stepped down from her council seat in May, citing work conflicts, while Beckett decided against running for re-election last fall. When the merits of the tax were being debated last year, City Hall countered with projections that revealed troubling budget gaps without the corresponding revenue.      

If all remained the same on the expenditure side, the city would have faced a deficit of $401,364 this year, according to Finance Director RJ Stevenson. The shortfall would soar to $549,134 in 2015 and rise to $768,668 by 2018. All revenue from the utility tax goes to the city's street fund. 

At Tuesday's City Council meeting, Stevenson provided an update on future projects slated to benefit from utility tax funds, including next year's renovation of Appleway Avenue. While the Transportation Improvement Board will cover well over half the cost of the $2.03 million project, the city's match of $840,000 is expected to come from the utility tax.

In 2016, a $1.8 million upgrade of Liberty Lake Road is projected to include a contribution of $400,000 from the utility tax as the city's match. Funds from the tax also support ongoing street maintenance, snow removal and projects identified in the Transportations Improvement Program and the Streets Maintenance Program. 

On Tuesday, Stevenson described how an analysis of the utility tax is part of the process of preparing a municipal budget for the upcoming year. In citing the total utility tax revenue from of $655,699 in 2013 – lower than the projected amount of $662,000 – Stevenson pointed to lower gas rates but added that revenue is expected to increase as rates go up. The city collected $75,000 in 2013 from gas but is projecting $90,000 for this year.

The only dissenting perspective on the utility tax came in the form of a letter from Brandon Hunt of Liberty Lake-based Huntwood Custom Cabinets, which was read into the public record. Hunt, who has been critical of the tax in the past, urged council to "do away with this tax that is putting a burden on our company and the rest of the community."

Hunt reminded city leaders that the tax had been instituted as "a short-term solution to cover the expense to run the city in the emergency they were in." Hunt's letter also expressed concern that the city might install another tax under similar circumstances and rationalize an approach "to continue to take that new revenue stream from its citizens and businesses." 

"Let's please stop this never-ending cycle now and take away the utility tax, reduce our spending to match a sustainable level and not add services and projects that will only drain the community's budget," Hunt wrote. 

Prior to Liberty Lake's adoption of the tax four years ago, it was among a small minority of jurisdictions in Washington state that did not have any form of a toll on utilities.  

As part of his report, Stevenson reviewed the city's third quarter financials, which include robust totals from sales tax and higher-than-projected revenue from permitting and the real estate excise tax. Meanwhile, income from Trailhead Golf Course has caught up and exceeded the numbers from 2013. 

"Overall, it's really been a strong growth year for the city," Stevenson said.

On the property tax side, new construction has also meant a jump in assessed valuation citywide. Permitting alone has added $324,000 to city coffers this year, Stevenson said. Assessed property value is expected to be at approximately $1.20 billion in 2015, up from $1.11 billion this year. The city is expected to bring in $1.88 million in property tax revenue in 2014, with the revenue providing the bulk of budget support for both the police department and library. 

The city does have the option of increasing property tax by 1 percent in 2015, a decision bypassed by council last year. The hike would mean an additional $21,000 in revenue next year. Council can choose to bank the property tax capacity for the future. 

Mayor Pro Tem Cris Kaminskas said she would lean against a property tax increase in deference to the Central Valley School District capital facilities bond that will be on the ballot in February. 

"I would likely vote against the 1 percent increase in order to throw my support to Central Valley schools," Kaminskas said. 

In other council news: 

• Bob Schneidmiller of Friends of Pavillion Park thanked the city for its support of another successful summer entertainment agenda. FOPP will host its annual Holiday Ball fundraiser at the Davenport Hotel on Dec. 6. 

"Without the support of the community, we couldn't put on such a great summer program," Schneidmiller said.

• Council heard a report from the Spokane Transit Authority on its 10-year draft plan to sustain and grow transit services. STA is in the last two months of gathering public input for "Moving Forward," which proposes a goal of increasing ridership by 30 percent while adding 75 shelters, new park-and-ride locations and high performance transit, among other components. The draft plan includes later Saturday evening routes from downtown to Liberty Lake, non-stop commuter service during peak weekday times and pilot service to Coeur d'Alene. There has also been discussion of adding 300 parking places to the Liberty Lake park-and-ride. To fund the plan, STA is gathering feedback on a potential 0.3 percent increase to sales tax that would not impact food or gas. The agency has retained a 0.6 percent rate on sales tax since 1981 but has the capacity to go up to 0.9 percent. Mayor Steve Peterson and Kaminskas both brought up the need for increased STA service to the city's eastern section on Tuesday. 

• The Liberty Lake Police Department will host the fourth annual Domestic Violence Symposium on Saturday, Oct. 25, at the LLPD precinct. The free informational event will run from 9 a.m. to noon and include representatives from the YWCA, law enforcement and Abuse Recovery Ministry and Services (ARMS). To learn more, contact LLPD at 755-1140.

• Peterson will present his municipal budget for 2015 at the next City Council meeting, scheduled for Tuesday, Oct. 21, at 7 p.m. at City Hall.

• Council unanimously passed Ordinance No. 214, implementing a civil infraction for minors in consumption of marijuana. The initiative supplements regulations already in place that address possession of the drug. Police Chief Brian Asmus said law enforcement officials in Spokane Valley and Pullman have already inquired about Liberty Lake's ordinance.

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