UPDATE: Revenue Likely Focus When Lawmakers Discuss Annexation Mar. 19
Burien City Council members are scheduled to discuss at their meeting Monday, March 19, “if and when to act” on a proposed annexation of unincorporated North Highline.
And how annexation of the remaining unincorporated area will be paid for, should that happen, is expected to be a primary topic of conversation during the meeting.
If the council decides to adopt a resolution to proceed, either at their April 2 or 16 meetings, the question likely will be submitted to North Highline voters in the Aug. 7 primary election.
But if they opt not to proceed now, that will either delay or stop the annexation process.
The Burien council would have about two more months to bring the issue to a vote in the November general election, said City Manager Mike Martin.
The state’s Growth Management Act, adopted by the Legislature in 1990 to coordinate urban growth and reduce population sprawl, requires that unincorporated communities in urban areas either become separate cities or be annexed by an adjacent municipality.
But with cities limited by Initiative 747 to a maximum property tax increase of 1 percent per year, how to pay for the transition costs of an annexation during the first few years has become a key concern of municipalities considering it.
Annexation Sales Tax Credit
The Legislature responded in 2009 by granting these cities a state sales tax credit for 10 years following annexation. For Burien, this will be $5 million a year for 10 years if the city annexes unincorporated North Highline.
With the state facing yet another large general-fund deficit, Gov. Chris Gregoire proposed in November eliminating this sales tax credit as part of a long list of suggestions to balance the budget for the remainder of the 2011-13 biennium.
But when the Legislature – which failed to adopt a revised budget to offset the state’s revenue shortfall – ended its 60-day regular session earlier this month, that sales tax credit remained in budgets proposed by Democrats and Republicans alike in both the House and Senate.
Preliminary indications from staff members of legislative budget writers and lobbyists alike are that the annexation sales tax credit will be in the final revised budget, which legislators hope to adopt before the end of the current 30-day special session.
Martin, meanwhile, remains adamant that no state sales tax credit would be a no-go for an annexation by Burien.
“We’ll have to wait and see what the state does,” Martin again told the B-Town Blog recently. “If they don’t include the sales tax credit, we’re done.”
Now that it appears likely the Legislature will keep the annexation sales tax credit in the revised state budget, he is moving the question forward in case council members want to schedule an annexation vote with the primary election.
“If and how to proceed with annexation, that is the council’s decision,” he said.
As for the sales tax credit, “the fact that it remained intact” in all budgets proposed during the regular session is “encouraging that it will remain there … it’s a good sign.”
For All 10 Years?
But keeping this credit in the state operating budget for another year is one thing – especially with additional revenue shortfalls projected for the 2013-15 biennium. The flip side of this equation is what might happen during its remaining nine years of this credit?
Burien council members have expressed concerns about the risk and the negative financial impact on the city that would result if they annex North Highline with the sales tax credit in place this year, but the Legislature eliminates it in a budget-balancing move in 2013 or beyond.
“Anything can happen year to year,” Martin said about that possibility. “We’ve got to work with what we’ve got now.”
He noted that one Legislature can’t tie the hands of future legislatures, but “there may be non-legislative ways to secure it” if the sales tax credit stays in the final state budget this year and Burien proceeds with annexation.
“That’s my hope. For now we’ll wait and see.” But, he added, “I think it’s there. I’m not worried about it nor is anyone else – our lobbyists and other cities,” which have recently completed or have pending annexations.
The annexation sales tax credit has been linked by legislative budget writers with other sales tax provisions that are expected to remain in the final budget.
In the meantime, the city is exploring the “non-legislative” options that might guarantee this revenue source for a full 10 years.
Funding from King County?
King County, some council members suggest, is also a potential source of funds to help cover Burien’s cost of annexing North Highline – especially long-overdue capital improvements there.
Councilman Jack Block Jr. was an outspoken advocate of this as Burien lawmakers continued their discussion of the issue last year. He repeatedly maintained that King County – which is also cash-strapped – should compensate the city for absorbing North Highline.
Not only does the county need Burien to take the unincorporated area off its hands, said Block, it should be obligated to pay the city for years of neglect in the maintenance and improvement of roads and bridges and parks there if annexation takes place.
Martin told the B-Town Blog that he is beginning “background discussions” with King County over “specifics regarding annexation, including financing, of concern to the city” – but declined to elaborate.
It is likely that Block will raise this matter during Monday night’s meeting.
Councilman Gerald Robison, perhaps now the leading advocate of annexation on the city council, has been equally adamant that Burien needs to bring the unincorporated area into the city to rein in current land-use practices there.
Robison is concerned that current county land use policies, which allow continued construction of low-income public-housing developments in North Highline, takes property off the tax rolls while increasing pressure on schools, social services and law enforcement.
On the other hand, council members Bob Edgar and Lucy Krakowiak have argued emphatically that Burien cannot afford another annexation at this time, and that those costs will exceed projections even with the state sales tax credit.
A Brief History
The city council approved on Oct. 3 a Notice of Intent to Annex the remaining unincorporated area between Burien and Seattle, which came after several months of lengthy hearings and discussions, including hours of testimony from consultants and local residents.
That measure was approved by a 5-2 vote. Since then, however, Edgar defeated then-Councilman Gordon Shaw, another strong advocate for the proposed action, in last November’s election.
Burien’s notice of intent was submitted to the King County Boundary Review Board, established by the Growth Management Act, which held a public hearing on the matter on Jan. 9-10.
The Boundary Review Board approved the proposed annexation on Feb. 16, noting in part:
The next step is for the City Council to pass a resolution confirming the Board’s decision and requesting that King County set an election date, which could be in August or November 2012.
The City Council is waiting for the state Legislature to approve a state budget before requesting an election.
The Council has indicated it will not proceed with the annexation if the current state tax credit that helps cities provide services to newly annexed areas tax credit is reduced or eliminated from the state budget.
A resolution to hold a special annexation election at the same time as the primary election must be adopted by the city council and received by the King County Clerk by April 25.
Under state law, only registered voters in the proposed North Highline annexation area are eligible to vote on the proposal, regardless of the date for such an election.
Even if the question is placed on an election ballot and approved, the city still retains the option of delaying formal annexation if circumstances require it.
The proposed annexation of remaining unincorporated North Highline was a volatile issue even before Burien lawmakers began considering it last spring – after the Seattle City Council backed away from the once-contested area.
In 2009, voters in the southern part of unincorporated North Highline approved a proposal for annexation by Burien. That area became part of the city – now known as North Burien – on April 1, 2010.