The Sammamish City Council will hold a five-hour financial “retreat” Thursday at City Hall to determine whether the City’s financial condition is sound enough to avoid a tax hike, new taxes or new debt.

The meeting begins at 2pm.

Sammamish faces large road building expenses if it follows through on everything it wants to do or thinks it should do.

$92m in projects

The Transportation Improvement Plan of 2015 identified $92m in projects, some of which have been in the TIP for years without pursuing. Inclusion in the TIP provides for “concurrency” when approving new development because the projects are in the six-year TIP.

Whether Sammamish (or any other jurisdiction) builds the projects are irrelevant; the “plan” provides compliance with state law that roads will be able to accommodate growth within six years of development.

Concurrency study

On July 10, at a special meeting, a Transportation Management Plan (TMP) will be presented to the Council that for the first time is a comprehensive study, with recommended priorities, of the City’s road needs.

It’s also at this meeting that discussion of an independent study by citizen Miki Mullor will take place. Mullor on June 5 revealed a study he did that concluded Sammamish was erroneously applying concurrency standards and failing to use recent traffic counts in place of 2012 numbers.

The result, Mullor concluded, is that Sammamish has been improperly approving development when traffic concurrency testing should have failed.

Not just roads

Although road projects are clearly the driving factor of Sammamish finances, these are not the only issue.

Sammamish has invested millions in adding and developing parks. It also spent millions to build a new community center, with a swimming pool, and is committed to additional development because of this project.

Operating budget vs capital budget

Roads, parks and buildings are part of Sammamish’s capital budget. When it comes to the operating budget, this is what city officials focus on when it comes to touting sound fiscal condition and when or if the City faces the so-called “cross-over” point.

In layman’s language, the cross-over point really is about deficit financing.

The cross-over point has been the subject of debate for years. Budget projections have been conservative and historically revenues were better than forecast. This allowed the cross-over point to continually move to the right.

But today, this is becoming more uncertain as operating expenses grow.

More to the point, the cross-over point never included capital expenses, which were largely financed out of “ending fund balances” (i.e., the bank account) generated from revenues in the operating budget.

This circles back to approving development.

The vast majority of Sammamish revenue is generated from property taxes and permit fees. Permit fees come from development applications. Property taxes come from developed property.

Hence, Sammamish needs to approve development to fund itself for operations and capital expenses.

To tax or not to tax, or incur debt

City Council Member Tom Odell publicly said on several occasions that Sammamish has neglected its road infrastructure for 10 years. He believes that issuing bonds will be needed to finance road improvements.

The City hasn’t taken the 1% annual property tax hike allowed under state law for eight years.

There are several possibilities Sammamish could use to raise taxes, as illustrated below.

In the past, City Councils have been loath to raise taxes or issue debt (which must be repaid from operations, which in turn could require more taxes).

But deferring road projects, plus a commitment to spend millions of dollars in the greater Klahanie area if voters there approved annexation to Sammamish (as they did), appears to make the need for more revenue inevitable.

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