City Council considers 1 percent property tax increase EVERETT - The city will be asking for a 1 percent property tax increase to balance the proposed 2013 budget.
The budget doesn’t include any layoffs.
The 1 percent increase would bring Everett’s property tax rate up to $3.10. An owner of a $250,000 home in 2013 would pay $3.60 per $1,000 assessed value. The figure includes the city’s 50-cent emergency medical services levy rate.
Everett plugged a $10 million shortfall in next year’s budget by holding off on contributing to its emergency services pension funds and by pushing money the city didn’t spend this year into next year’s budget, among other cost-saving moves.
The city again is holding off on making a $3.5 million contribution into the police and fire pension funds. The funds have enough money to last through 2030, chief financial officer Debra Bryant said.
The city underspent almost $3 million from its budget this year, which will be pushed forward to the 2013 budget. Earlier this year, department directors were told to find a collective $2 million in savings.
The city operates on a $110 million general fund budget that pays for day-to-day expenses.
Bryant’s department, though, forecasts increasing deficits over the next few years as a ramification of the Great Recession. The city faces a $10.4 million shortfall for 2014 and that grows to $14.6 million in 2016 in its financial outlook.
“All of this pressure we’re putting on departments ... it doesn’t go away,” Bryant said.
Tax revenues on almost all levels are lagging behind city forecasts.
Retail sales tax revenue is down by 5 percent, and Bryant expects the revenue to underperform through the end of the year. The city forecasts sales tax revenue to reach $22 million this year, which is slightly up from last year, but down from pre-Great Recession levels. In 2007, the first year before the Great Recession, the city received $26.4 million in sales tax revenue.
The city is “only now seeing an uptick (in sales tax revenue), just not seeing that robust recovery” officials hoped for, Bryant said. “We don’t want to create any expectations of great magnitude.”
A forecast released earlier this month shows sales tax revenues will only get close to pre-recession levels in 2017, reaching $25.1 million.
Utility tax revenues are experiencing a $2 million hit with the loss of the Kimberly-Clark mill, which was a heavy water user. Utility revenues are down by 5 percent from forecasted expectations of $12.2 million. Utility taxes go directly to sewer and water infrastructure improvements.
Property tax revenues are slightly higher than expected, but that’s in part from delinquent accounts paying up. The city will be asking for a 1 percent property tax increase, the most it can increase the rate without voter approval.
The City Council got its first look at the tax proposal Wednesday, Oct. 17. Additional readings of the ordinance will happen Wednesday, Oct. 24 and Oct. 31.
Earlier this year, Bryant pushed city departments to underspend and cut money from their budgets. The departments had to pick and choose what to cut and collectively they saved $3 million.
“I appreciate the surgical procedure” the city took on cutting the budget instead of a flat cut, Councilwoman Gigi Burke said.
Everett tackled a $9.4 million shortfall last year. The city plugged that hole largely with three major items that filled about $8 million of the gap. One, it saved $4 million by not putting money into its police and fire department pension funds. Two, it reduced street infrastructure and vehicle pool spending by about $1.7 million. Three, it pushed $2 million in savings toward this year’s budget.
The city is scheduled to hold public hearings on the 2013 budget Wednesdays Nov. 7 and Nov. 14.
The city’s budget is expected to be finalized by a City Council vote Wednesday, Dec. 12.