Bonney Lake property owners will not see an increase in 2010 property taxes, following a 5-1 vote by the City Council against an ordinance that would have allowed a rate hike if the city found a substantial need.
Under state law, for taxing districts with populations more than 10,000, the property tax limit is the lesser of 101 percent or 100 percent plus inflation.
The applicable calculation has been established as a negative-.848 percent, therefore limiting taxes to be collected in year 2010 to 99.152 percent of the prior year.
Councilman James Rackley said the council should let the rate go forward to the rate of 99.152 percent of this year’s tax collection. He made a motion to table action and Councilman Dan Decker seconded it.
Deputy Mayor Dan Swatman, filling in for Mayor Neil Johnson, said he doesn’t want to raise property taxes, but lower them. He said the city would face a $46,000 shortfall on property taxes collected.
“I’m pretty confident there are a lot of people with the city who can make this work,” Swatman said.”Forty-six thousand sounds like a lot in one hand, but not so much in the other.”
He said a property owner with a $279,000 home would pay $3,140 under a 101-pecent factor or $3,083 at the 99.152-percent rate – saving $57.
“It’s not very much for an individual property owner, but it’s something,” Swatman noted. “If the council can demonstrate a substantial need, I’m open to listening. I can’t imagine this city doesn’t have a way to make up $46,000.”
Councilman Mark Hamilton, who offered the lone vote in favor of the ordinance, said his concern was not this year, but future years.
Chief Financial Officer Al Juarez said in a memo prepared by City Administrator Don Morrison, the $46,000 loss would be forwarded to next year.
Councilwoman Laurie Carter said the $46,000 compounds over the years on how much is lost in revenue, but the city could propose a 101-percent increase on utility tax which would generate $116,000 per year.
Carter said if the council doesn’t pass the ordinance, the city may need to have a lid lift election that would cost more than $30,000.
Juarez said the difference in allowable levy collections between 101 and 99.152 percent is $45,391; between 101 and 100 percent is $24,562; and between 100 and 99.152 percent is $20,829.
Rackley said the city can do without the minimum increase and make reductions elsewhere.
Councilman Dave King reminded the council that the property tax revenue collected goes to the General Fund which pays for the maintenance and operation of the city, not items listed under Capital Improvements.
“We can do without it for one year,” King said. “We have not engaged in drastic job cutting, we have not engaged in drastic actions other cities are engaged in.”
King said the city needs to “monitor the movement of the economy and keep the budget expectations realistic.”
Councilman Dave Bowen said if citizens see the city has not raised taxes, it will have “an emotional effect that we are all in this together.”
Swatman said the city is not immune to the recession.
“Times are difficult and government needs to respond,” he said. “We can show the public that we can do the things in Bonney Lake like the downtown improvements, police on the roads and take care of emergencies. We can still absorb the downturns of the economy.”
