Burien Council to Look for Ways to Offset Tax Losses at Monday Meeting
Burien city council members will begin the laborious task of writing the city’s 2013-14 biennial budget at their monthly study session tonight (Monday, July 23).
Their efforts will be complicated by declining revenues and an unfunded federal mandate that likely will make a marginal tax increase necessary.
“There are good, solid reasons why we need to do this now,” City Manager Mike Martin told The B-Town Blog.
A primary factor is the police budget, which “is increasing at 4 percent a year,” Martin said. “It way outstrips everything else.”
While Burien “is not going broke by any means,” Martin said if steps are not taken now to offset losses in property tax revenue the city likely would face budget problems in two or three years.
“The City lost $467,000 in property tax revenues in 2012,” and is estimated to incur “another $300,000 in property tax loss” in 2013, City Finance Director Kim Krause noted in a presentation for tonight’s meeting.
This, Krause said, resulted from Burien losing “8.8 percent in assessed valuation” in 2012, “causing the City to hit its property tax cap of $1.60 per $1,000 in assessed valuation.”
Now staff is projecting “another $300,000 property tax loss” in 2013, which is “based on known assessed valuations” that will result in an anticipated 4.5 percent loss in assessed valuation.
And this is not a one-time dip. Even if “assessed valuation starts growing at 2 percent per year in 2015,” the city won’t return to 2011 property tax revenue levels until 2020, she added.
The new revenue forecast “assumes the council will levy the maximum” allowed under state law “each year until property taxes return to 2011 [levels] – this means that if [assessed valuation] grows by 2 percent, Council will levy a 2 percent property tax increase.”
Had assessed valuation in Burien “continued to grow rather than decline, the City would have collected an additional $5.5 million in property taxes from 2013 through 2018,” with $2.6 million of this going to the General Fund, Krause said.
Compounding the financial drain on Burien’s treasury are federal requirements that impose new federal requirements for surface water management and drainage control, which take effect next year.
The Drainage Master Plan, which was discussed at length at the July 16 council meeting, recommends a surface water management rate increase to offset the cost of the federal mandates.
Preliminary staff recommendations to the council to offset the decline in property tax revenues call for:
A 6 percent franchise fee on the distribution portion of Seattle City Light rates, which would generate $1 million per year.
An increase in the electric utility tax from 3 percent to 6 percent; $90,000 per year.
Transfer the Solid Waste Utility Tax from the General Fund for $393,000 per year.
Increase the Parking Tax from $1 to $3 per transaction; $100,000 additional per year (the current tax generates $50,000 per year).
Surface Water Management Fund
A two-step rate increase – 12 percent in 2013 and 12 percent in 2015.
The cumulative monthly impact to Burien taxpayers would be an estimated $2.56 per month, plus electric utility tax increases that are different for Seattle City Light and Puget Sound Energy customers.