LETTER: Reader’s Rebuttal Against Our Analysis On Proposed Annexation
Jack Mayne wrote an interesting analysis of the Berk Report and the issues regarding the annexation of the North Highline area. I would however take issue with part of his findings.
The article correctly states that the Governor “proposed eliminating the annexation Sales Tax Credit” and further “which her budget office projects would save $17.8 million”. It was also reported on October 27, that the Governor states her action terminate “a tax credit that benefits seven cities in King, Pierce or Snohomish counties.”
Okay so let us put this in real numbers. $17.8 million divided by seven cities is $2.5 million average. Not quite $5 million or even close. Since this credit is also based upon size of the city and the size of the annexed area, it is more than fair to say that larger cities than Burien are getting closer to the max amount.
Now look at the Berk report. It states in Findings #2 paragraph 1 that, “the annexation sales tax credit allow the city … up to the maximum 0.85% of the total CITY sales tax revenue not to exceed $5 million a year.” [Emphasis added]
Let us do the math on that. The city of Burien as averaged less than $5 million TOTAL sales tax revenues for the past four years (city budget records). If we use $5 million as the base amount sales tax revenue and multiply by 0.85 % we get $42,500 which would be the calculated annexation sales tax CREDIT to be received not $5 million. ($5,000,000 X 0.0085 = $42,500.) The Berk report uses this max $5 million figure throughout the rest of its report. Is that a reasonable number for the City Council to base its decision upon?
In a different publication by the Municipal Research and Services Center of Washington it states, “The tax is a credit …against the 6.5% STATE SALES TAX, so it is not an additional tax to a consumer.” This appears to contradict the Berk Report as to the basis of calculating the “credit”.
The numbers in Mr. Mayne’s article, previous B-Town blog article, and in the Berk Report just do not “pencil out”. Whether or not the Governor eliminates the Sales Tax Credit to cities is a critical factor. It however should not end nor allow for what appears to be erroneous numbers in this annexation debate. Either the money ($5million) is there or it is not. Seven cities cannot get $5 million each from a pot of $17.8 million.
– Chuck Rangel
[Have something you’d like to share with our Readers? Please send us your Letter to the Editor via email. Include your full name, and, pending our review, we’ll most likely publish it.]