Proposed property tax hike draws Councils ire
August 28, 2008 · Updated 10:35 AM
MARYSVILLE As they went through the details of the administrations proposed 2008 budget at last weeks City Council meeting, there were two issues that grabbed the most attention from local officials.
For the first time, the citys sales tax has outstripped the city property tax as a revenue source. Secondly, though nothing is final at this point, it seems unlikely Council will OK what has turned into a controversial property tax increase.
Proposed by the administration to fund a community policing program, a 1 percent property tax hike generated little support but plenty of debate among Council members who will decide the issue at their Nov. 26 meeting.
Intended to benefit the citys EMS, a second 1 percent property tax increase garnered no comment from Council and seems headed for passage.
Regarding sales taxes, Mayor Dennis Kendall and others said Marysville has worked hard to develop its retail and business base to move the revenue emphasis away from property taxes.
Marysville has primarily been a bedroom community and as a bedroom community, that doesnt necessarily give you the money you need to keep things moving, Kendall said following the Council session.
Thats a pretty cool thing for Marysville, Chief Administrative Officer Mary Swenson said of the rise in sales tax collections.
According to projections presented by Finance Director Sandy Langdon, sales tax revenue isnt overwhelming property tax dollars. What Langdon called conservative projections have the citys sales tax accounting for about 12 percent of Marysville s overall revenue in 2008. Property taxes should represent about 11 percent. Still, Langdon and others argued the numbers show some significant improvement in the right direction.
Langdon and Swenson also said there are a number of businesses, anywhere from between six to 10, that could come on line sometime this year presumably swelling the retail collections further.
The overall property tax numbers dont include the controversial 1 percent increase. While state law has allowed cities to bump their property taxes every year, Swenson noted Marysville hasnt taken advantage of the opportunity for five years. She did admit shes pushed for it every year, just as a hedge against inflation among other reasons. Still, for the most part, City Council just isnt buying into either her or Langdons arguments.
Council members Jeffery Vaughan and Jeff Seibert led the charge against increasing the tax, at least in regard to the community policing program, though Councilman Jon Nehring also indicated he likely would not support it.
Vaughan said past hikes in the property tax irked him before he joined Council and were among the reasons he decided to run for office. Seibert argued funding for community policing could be found elsewhere in the budget, if officials feel that strongly about starting such a program. Swenson said the most likely source for those dollars would be a cut in the number of new employees the city hopes to bring on this year. That reduction is not an idea she seemed to favor.
The 1 percent increase would raise about $73,00 next year. For a Marysville home valued at $200,000, the increase would raise property taxes from about $378 to $382 annually, according to administration estimates. Judging from the citys budget presentation, those figures include the less contentious EMS increase. Langdon said the average Marysville home is valued at about $206,000.
Councilwoman Carmen Rasmussen was the most vocal proponent of the second 1 percent tax, pointing to what she called the relatively small increase home owners actually would see on their tax bills. She said a community policing effort was well worth the price. Rasmussen also argued the city could fall behind in its revenue collections if it didnt take advantage of opportunities for small tax increases. The city already has lost the so-called tax bank officials at one time believed they had gained by not adopting the allowable 1 percent increase in past years.
Langdon said the state normally allows cities to raise property taxes a percentage amount equal to the number of years they dont act on the regular 1 percent increase, apparently up to 6 percent. But a fire levy approved last year meant officials lost the opportunity to draw on the tax bank. Langdon said miscommunication between the state and City Hall led local leaders to believe they had retained the tax bank even with the adoption of the fire levy.
Besides Rasmussen, Councilman John Soriano was the only Council member to speak in favor of the non-EMS tax last week. Soriano said he felt the 1 percent figure was more than reasonable.
Again, Vaughan didnt buy into that argument.
People are deeply opposed to tax increases, he said, even if they see government acting responsibly as Rasmussen argued is the case in Marysville.
On the issue of the sales tax, Nehring wondered if they city had anyway to compare the gains in revenue with the cost of increased calls for city services in such areas as public safety. Swenson said she didnt have such a comparison available and creating one would be difficult for several reasons.
Overall, I think its a net gain in dollars, she said.
Kendall added later that one of his goals when he became mayor was to build up the citys retail. He believes that objective has been reached to some extent and he now wants to move some of the citys development focus to bringing in new jobs.