More study about new taxes or budget, service cuts for Sammamish

The day before the State Legislature began to reveal a big property tax hike is coming for education, Sammamish City Council members met with staff in a retreat to examine City finances.

The Council met with staff Thursday afternoon and evening. The State began releasing information about its new budget, with tax hikes, on Friday.

Council Member Tom Odell, looking at the 2017 Six-Year Transportation Improvement Plan (TIP) that identifies nearly $90m in spending through 2023 and up to $165m in future years, inclusive of the $90m, and declared officials need to examine all potential revenue sources to pay for these projects.

Translated, this means potential new taxes.

At the same time, Council Member Tom Hornish remains unconvinced that budget cuts aren’t impossible and if these are deep enough, funding the road projects could come out of operations and current revenues.

Divergent opinions

Council Member Ramiro Valderrama warned that any effort to consider new taxes will run head-long into tax fatigue from Sound Transit (ST3) vehicle taxes, which trebled, a new ST3 property tax and sales tax hike; and the coming increased taxes (announced the next day) from the Legislature in a new state budget to satisfy a Court order to increase funding to pay for schools.

Friday, Valderrama estimated that he would pay an additional $600 annually in property taxes because of the State budget.

Valderrama’s warning did nothing to assuage Member Kathy Huckabay from suggesting that a new tax tied to automobiles, in the form or a sales tax or a $20 vehicle tab, to pay for roads should be considered.

This is on top of the trebling of the car tab tax imposed by Sound Transit following voter approval last year.

For Sammamish, assuming two vehicles per household and 16,000 households, the City would gain $640,000 per year in revenues.

Public split

The public appears split about new taxes, according to a statistically valid survey and an unscientific virtual town hall meeting.

Participants in a June 23 virtual town hall on Sammamish finances overwhelmingly rejected new taxes to finance roads projects or acquire and preserve land from development.

Instead, of 337 people who attended the virtual town hall, 175 people who responded to a survey favored living within the current financial means.

This contrasts with a statistically valid survey completed earlier in the year in which new or more taxes were supported to accelerate road improvements or acquire and protect land from development.

Some Council Members and Staff questioned the validity of the results from the virtual town hall.

Reports of out deficit are greatly exaggerated

City Manager Lyman Howard opened the meeting with a prepared statement that clearly reflected exasperation at concerns the City is facing financial difficulties in the years ahead.

“I have seen and heard comments that the City is about to fall off the financial cliff,” said Howard. “This is not the case.”

He said there is no bonded indebtedness. The City hasn’t taken the annual 1% property tax hike allowed by State law. Howard said doing so would have taken money out of the taxpayers’ pockets without a clear need.

Howard said Sammamish is the envy of other area cities for its fiscal soundness.

The current forecast over that day when expenses exceed revenue is around 2023-24. This is the so-called “cross-over” point.

But this is just for operations.

Capital expenses, whether these be roads or something else, are not included in the cross-over point analysis.

Paying for new debt, which has the support of the statistically valid survey and the town hall, however, would require new taxes at the current spending/revenue pace.

This is where Council Member Hornish advocates cutting the budget so there is enough room to pay for debt within the current revenue stream.

More study, more alternatives

In the end, the Council directed staff to study alternatives, from cutting the budget (services and staff) to identifying new taxes.

Officials will revisit the topic later this year.

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