At its Nov. 13 meeting, the Snoqualmie City Council discussed a different direction for property taxes in the city, and it approved an amendment to the city budget that would keep funds directed toward their intended purposes.
During continued discussion regarding the city’s option to take the annual legal maximum of a 1-percent property tax increase for 2019, Councilmember Bryan Holloway suggested that the city forego the increase and instead take the option to bank that 1 percent for future use, when it could implemented with a more direct purpose.
Due to state law, cities are capped at 1 percent property tax increases per year. Cities can choose to take the property tax increase for the following year or pass on the increase, which banks that 1 percent to be used in a future year. The city of Snoqualmie has never passed on a 1-percent increase.
Holloway argued that the city has ended the year with a $2.5 million surplus with additional savings planned for the next few years. He asked the council to consider banking the 1-percent increase this year.
When asked for information clarifying the impact of the proposed increase, city staff gave two examples. For a home with an assessed value of $500,000 the 1 percent would equate to about $10.90 per year, for a $700,000 home, that increase would amount to $15.28. The increase would net a total of $77,885 over the 2018 property tax revenue.
Mayor Matt Larson also said the proposed budget the city is working on has the 1-percent increase assumed into the work so if the city decides to not take the increase, reductions in other areas may be necessary.
Councilmember Matt Laase agreed with Holloway, and said that when the city is in this position next year, they may have a better idea as to what that increase could be used for. He also said a surplus in reserves means the city does not need the 1 percent at this point.
“It’s prudent on our behalf to address the budget in a way that is responsible and does not increase taxes for our citizens, and to use the money we have if we have extra,” Laase said.
Councilmembers Katherine Ross and Jim Mayhew did not agree.
Ross said the 1-percent increase is still less than inflation of expenses and cited the contracts the city has made with several unions that are increasing more than 1 percent.
Mayhew cited the ongoing budget work and said the conclusion that the city has a balanced budget is premature, and any supposed surplus in revenue may not be be set in stone. Without the 1 percent, he said, not only is the city losing out on the ability to cover expenditures but they are also falling further behind the increase inflation of expenditures year over year.
The reserves the city could use in lieu of the property tax increase, he said, have been built up from one-time projects such as building The Ridge. He asked the council to reserve their final decision until they are really sure about the state of the budget.
The deadline for the city to report their decision to King County is Nov. 30, before the planned final approval of the budget. The council did not take action that night, but will continue discussion at its meeting on Nov. 26 where a vote is expected.
The council also approved a amendment to their upcoming budget that restricts administration’s ability to transfer funds between functional areas. Under this amendment the money assigned to various departments in the budget would be protected from shuffling.
Mayhew gave an example of moving police funds to different areas of the police department, but those Police funds could not be moved to fire and emergency medical services or the parks department.
Mayor Larson also added that the administration had no objection to the amendment, which was approved by a 6-1 vote. Councilmember Peggy Shepard cast the dissenting vote.