Chehalis residents are all but certain to see their property taxes go up next year to account for part of a nearly $300,000 shortfall in the projected 2019 budget for the city’s general fund.
A majority of the city councilors in attendance at a workshop prior to Monday’s regular city council meeting begrudgingly expressed the need to do what they felt was necessary for the city to provide services at a level expected by citizens.
Mayor Dennis Dawes, along with councilors Anthony Ketchum, Dr. Isaac Pope and Terry Harris, supported using the maximum 1 percent increase of both the regular and EMS property tax levy amounts as allowed by law and collecting 25 percent of the city’s banked property tax capacity of about $325,000 — essentially tax collection that’s deferred when the city does not exercise its right to raise the tax amount by one percent.
Should that course of actions be included in the final budget as adopted by the end of the year, it would increase city revenue by $102,786.38 at a cost of $28.88 for a property with an assessed value of $200,000.
Chehalis last raised the property tax in 2012. Prior to then, the last time it happened was in 2000. Those years are also the last two times the city used a portion of its banked property tax capacity.
“There is no good time to raise taxes or fees,” Dawes said. “I don’t care if the economy is blooming or poor. Nobody wants to pay more. But, we’re charged with overseeing services provided by the city. As disgusting as it may be and the bad taste it leaves in our mouths, we probably have to look at using some banked capacity … It’s not going to be looked on favorably and I understand that.”
Councilor Bob Spahr said he would sign on to using 15 percent of the banked capacity but was open to 25 percent. Only Daryl Lund voiced unequivocal opposition to a property tax increase. Chad Taylor was not present at the meeting.
The main reason for the shortfall appears to be a combination of rising personnel costs and the projected leveling off of revenues from sales tax collected for at least the next year. Any funding gap remaining after revenue increases and spending cuts would be filled by general fund reserves.
Regarding the latter, significant spending on large-scale construction projects, such as two new elementary schools, boosted sales tax receipts in 2017 and 2018. With construction of a shopping center on Chehalis-Centralia Airport land not projected to begin until 2020, next year will not have a big build to bolster city funds. Sales tax makes up nearly 53 percent of total city revenues in the project budget.
Personnel costs, led by police and fire workers, account for far and away the largest category of expenditures. Almost 75 percent of the projected $10,011,670 in expenses would go toward salaries and benefits for city employees. More than 55 percent of the general fund budget would go to the police and fire departments.
Budget committee members Dawes, Harris and Spahr cut nearly $400,000 from the initial budget document prior to it being presented to the full council. Cuts included $30,000 allotted for a new police evidence garage, $50,000 out of the line item for fire department overtime and $50,000 after the discovery of a duplicate entry.
Some items that are quickly rising up the list of priorities were not funded in the preliminary budget. Those include money for fire station repairs and the acquisition of land for a new fire station, funding for a study of 911 dispatch options and money to fill vacant city positions, some of which have remained unfilled for nearly a decade.
Items that made it into the preliminary budget include $88,000 of deferred maintenance and $50,000 for repairs to the Vernetta Smith Chehalis Timberland Library needed as a result of a leaky roof.
“Some of you say you don’t like taxes, but my question is do you like the services the city provides?” Pope asked rhetorically. “They have to be paid for some sort of way. We have to have good staff to provide those to us. If we put things in jeopardy by not raising taxes, then we aren’t doing our job. I hesitate to say I don’t like raising taxes when I do like the services taxes pay.”
A point made and repeated throughout the budget discussion was that while there are clear ways in which city staff can move money around to plug the shortfall next year, many are one-time solutions for problems that will need to be addressed in following years.
Reducing funding for facility and park maintenance could recoup an additional $45,000 or more, but would only defer work that needs to be completed sooner or later. Moving $93,000 set aside for compensated absences would mean there is no money banked for when employees retire and are paid for outstanding leave accrued, which a number are expected to do in the near future.
Current staffing levels remain lower than they were in 2008 when the recession necessitated personnel reductions, yet sales tax revenues have eclipsed pre-recession levels.
“We’re finally back financially to the 2008 revenue stream, but the problem is that it’s 2018 and all of our costs and expenses have increased dramatically,” Harris said. “We need to be another 15 percent higher than that just to be breaking even with where we were in 2008.”
The official 2019 proposed budget is scheduled for presentation during a public hearing during the council’s regular meeting, which is pushed back a day to Tuesday, Nov. 13 due to the Veterans Day holiday.
