Saturday, November 21, 2009

ONGOING COVERAGE: KENDALL YARDS

Levy lid lift focus of city race

Hession, rivals disagree on ending tax measure

Jonathan Brunt
Staff writer
July 1, 2007

In a surprise March announcement, Mayor Dennis Hession created what has become the first major issue of this year's mayoral race: taxes.

Citing $11 million the city had left over at the end of last year, the mayor said he would oppose renewal of the city's levy lid lift, a two-year property tax increase approved by voters in 2005. The extra property taxes, as well as an increase in the utility tax, were used to prevent what city leaders said would have been massive employee layoffs.

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Now, after telling voters two years ago the tax increase would be a temporary measure to allow time to fix perennial budget problems, Hession contends the city should follow through.

"I felt we owed it to our citizens to give them a break," he explained earlier this month.

But the city's rosy financial picture is not expected to last.

Using the same financial forecasts as Hession, his two chief rivals in the mayoral race – City Council members Al French and Mary Verner – have reached different conclusions. They argue the mayor's announcement was premature given a forecasted shortfall in 2009 without the extra tax revenue. They believe the city needs additional police and firefighters, which the candidates say could be hired if the levy is maintained.

French and Verner both say they are open to a proposal from Councilman Brad Stark to continue a levy lid lift, though they say it could be a reduced version of the one about to expire. Stark's plan calls for hiring 25 more police officers and 12 firefighters. Voters would again have to approve a continuation of the extra tax.

"I don't think we can take it all away," French said of the property tax increase. He believes the long-term solution is to attract more businesses and expand the tax base.

Hession and his administration have argued that throwing more money at forecasted deficits will not solve what they say is the city's fundamental financial problem: skyrocketing employee health care costs. Although they have yet to propose a plan for plugging the forecasted gaps, Hession and his backers say they hope to gain concessions in union contracts with city workers. The city's three largest unions are in negotiations.

Union officials doubt the accuracy of the city's long-term forecasts, suggesting dire predictions are rolled out in contract negotiation years for posturing.

Greg Borg, president of the firefighters' union, Local 29, said his members question concessions they made in the last contract given the large budget surplus.

"Our proposals don't have to do with giving anything away, they have to do with increasing our benefits," Borg said.

Verner, who chairs the council finance committee, said the mayor's long-term plans are too vague.

"I guess there's a program where we're going to wave a wand and make it happen," Verner said. "As a council member, I need to make sure that we have a definite strategy."

One candidate for mayor, Michael Noder, says he agrees the levy lift should expire.

"I don't feel we are delivering services as efficiently as we should," said Noder, a demolition contractor who serves on the county's Solid Waste Advisory Committee. "We're on this treadmill, and we have to get off it."

The final mayoral candidate, Robert Kroboth, did not return a call seeking comment.

Chief Financial Officer Gavin Cooley, in presentations to staff and outside groups, says city expenses historically have increased an average 5.4 percent a year; revenues increase 3.4 percent a year.

Cooley said last year's surprise windfall – largely from strong sales tax collection – more than covered expenses, but the city's robust economy won't last forever. By tossing the levy lift, the city projects a deficit by 2009. Cooley said maintaining the levy lift keeps the city from a deficit for two extra years – and that's without expanding the payroll as Stark proposes.

Stark dismisses the criticism.

He said he believes the levy lid lift should be able to sustain his proposed new hires in the long term and that Cooley's projections could be overly conservative. Large amounts of new construction have increased property tax collections and increasing population is adding more sales tax revenue, Stark said. He noted that Kendall Yards is expected to generate millions in taxes, even though for 25 years only a portion of the new property taxes generated by the development will be available because of a subsidy plan approved by City Council in May.

Spokane historically has collected about half the amount of taxes per capita compared to Seattle or Tacoma, said Stan Finklestein, executive director of the Association of Washington Cities.

Chud Wendle, a French supporter who served on the committee that recommended the 2005 vote on property taxes, said renewal of the tax should be decided by voters.

"I just want the voters to be the judge of it, not the mayor," Wendle said.