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Little revenue, less spending mark 2012 budgets for Snoqualmie, North Bend, Carnation
Valley cities are looking for the little wins in their budget process this year. In Snoqualmie, that means changes like new employee insurance coverage with more out-of-pocket costs for employees, but no increase in the city’s contribution. In North Bend, it’s a few small paving projects added to the schedule. In Carnation, where city staff and services have been steadily reduced for the past two years, simply holding steady will be a victory.
None of the cities are anticipating a reduction in staff in their 2012 budgeting processes. However, none of them are planning any capital projects for 2012, either.
“It is a lean year,” said North Bend City Administrator Duncan Wilson, who expects to present a completed budget to the North Bend City Council by Nov. 15. “There’s not a whole lot of projects and additional expenditures.”
Contributing to that lean year are decreased tax revenues on several fronts in each city: retail sales have dropped, reducing sales tax revenue; businesses have closed, which shrinks the city’s business and occupation tax revenue; and property values have dropped by more than 4 percent, cutting into the city’s revenues from property tax.
In Snoqualmie, where the tax accounted for about half the city’s revenues in its $52 million budget last year, Finance Director Rob Orton worries about the impact to the citizens.
“Property taxes, which everybody loves to hate, are going to go up if we do nothing,” he said. “Our property taxes could be up about $130,000.”
New homes are still being built in Snoqualmie, and are expected to bring in $37 million in property taxes in 2012, “but that’s about a third of what it was in the glory years,” Orton said.
Sales tax is Snoqualmie’s second largest revenue source, Orton added, and nearly half of that revenue now comes from the hydroelectric project on Snoqualmie Falls. The city will likely see a significant loss when the project ends, some time in 2013. Also, Orton said B&O taxes have steadily dropped in the past three years.
North Bend Mayor Ken Hearing is expecting a small increase in revenues in 2012, from one-time fees for new development. In his budget message to the City Council Oct. 4, he proposed dedicating that revenue specifically to paving projects. The city council repeatedly asked for increases to the city’s annual budgeted $100,000 for road paving and maintenance, and Hearing said the 2012 increase would be a start that would eventually lead to a $300,000 allocation within three years.
This increase doesn’t include potential revenue from the recently formed Transportation Benefit District. North Bend voters will decide whether the TBD can levy an additional 0.02 percent sales tax in the Nov. 8 election. If they approve the sales tax, the city will receive an expected $400,000 annually to spend on road repairs, as well.
With or without the sales tax revenue, the city should be able to complete the next year with its 10 percent reserve from last year’s $19 million budget still intact, Hearing said.
Carnation’s revenues are projected to be less in 2012 by $31,000, the amount of a grant the city used to update its shoreline master plan this year.
“It’s basically a flat budget, a freeze, if you will,” said City Manager Ken Carter.
Carnation, on a septic system until 2008, has few businesses, and minimal development to contribute to city revenues. The city relied heavily on REET and property tax revenue, and was looking forward to diversifying its income with a new housing development and new business growth once the sewer system went online, despite the large monthly access charge residents would have to pay to the county. Instead, property values dropped, the housing development stalled, and only a few businesses opened, leaving the city’s revenue stream almost unchanged.
Expenditures are all but frozen, too. The only major improvements the city has done were funded by state and local grants, with almost no money from the city, such as the soon-to-be-installed traffic signal at Entwistle, and the market shelters the city just started work on, in partnership with the Sno-Valley Tilth.