The City of Centralia will consider both a square footage tax and a traditional business and occupation tax to close an approximately $1.9 million deficit and balance the budget over the next two years without cuts to city staff.
Centralia Community Development Director Emil Pierson warned the Centralia City Council Tuesday night that he believed any significant staffing cuts would be detrimental to the city’s residents as they considered options for balancing the city’s budget.
“What you're doing is you're cutting your quality of life for your residents and for everyone involved,” Pierson said. “It's the quality of life, and that's what we're looking at.”
Pierson painted a relatively grim picture of the city in summer with parks and other public facilities closed due to lack of maintenance staff. The argument appeared to resonate with a majority of the city council.
The Centralia City Council held a marathon session Tuesday night to discuss the city's budget.
It started with an hour-and-a-half budget workshop kicking off at 5:30 p.m. and continued into the scheduled council meeting, which began at 7 p.m. The night concluded after 9 p.m. with a possible path forward.
The council voted to table a decision on the first reading of the budget, but not until it voted narrowly in favor of directing staff to prepare a version of the budget with new tax revenue sources.
Councilor Jan Nontell voted in favor of her own motion to consider the square footage and business and occupation taxes. She received support from Mayor Chris Brewer and Councilors Adriana Garibay and Ray Chapman-Wilson.
Deputy Mayor Kelly Smith Johnston and councilors Tucker Voetberg and Kevin Curtis voted against the motion.
The council will once again consider the first reading of a proposed budget during its next meeting on Tuesday, Nov. 24. But, this time, staff will also present the predicted revenue of the proposed taxes and predicted expenses of keeping all staff, including seasonal and part-time workers.
Debate over new tax revenue Tuesday night hinged on disagreements over the most viable long-term solution to the city’s budget woes. Where one group argued avoiding taxes would spur economic growth and increase revenue, a slim majority aired concerns that the council would find themselves in a similar deficit in two years without securing new revenue.
Smith Johnston, who voted against both the final tax proposal and a proposal to balance the budget without new taxes, referred to the argument against new taxes as a “bargain” the city had bet on during its previous budget cycle.
In balancing the budget in 2024, the council argued that avoiding taxes would benefit economic development and improve the city’s budget outlook over two years.
Smith Johnston seemed less convinced that approach would work this time around, admitting that while the local economy might have improved, “it wasn’t enough.”
“If we're making that same bargain, this is pretty tight, and we'd be, I think, continuing the pressure on our city team that feels inexcusable right now,” Smith Johnston said.
Nonetheless, Smith Johnston also voted against the detailed tax proposal from Nontell, opening the door for a middle ground to emerge in the coming council meetings.
Nontell’s motion specifically advised city staff to include a tiered square footage tax and a business and occupation tax with a $100,000 annual exemption, with the second being credited against the first, meaning businesses wouldn’t pay both taxes.
The proposed tiered square footage tax would have an exemption for the first 10,000 square feet, a $0.09 per square foot levy on spaces between 10,000 and 20,000 square feet, and a $0.12 per square foot levy on spaces larger than 20,000 square feet.
The four council members who voted in favor of pursuing the proposed taxes described the proposal as the only long-term sustainable option. Garibay and Brewer, who were the only two council members to vote in favor of enacting a business and occupation tax during the council’s previous budget process in 2024, said they didn’t want the council to be in the same situation during the next budget process.
“We wouldn’t be doing this if we just approved that two years ago, right?” Garibay said. “Back that time, and we had all the money, thinking that we will solve the problem, but there we are here again, trying to find ways to solve this.”
Nontell, despite not sitting on the council during the previous budget vote, shared similar concerns.
“If we don't do something about revenue now, we're going to be in the same place in two years,” Nontell said. “Only it's going to be worse. We're going to be looking at many more millions of dollars in debt, or an unbalanced budget.”
The council also voted against a motion to balance the budget with no new tax revenue as proposed by Voetberg. The motion failed with just two councilors — Voetberg and Curtis — voting in favor, and the rest of the council voting against the motion.
The motion from Voetberg also represented a council vote on a budget solution proposed by the freshman councilor that would balance the budget without major staff cuts or tax increases. Smith Johnston, who told councilors Voetberg and Curtis that their reasoning behind a no-tax approach appealed to her, also said she could not support the motion because of concerns that Voetberg’s proposal would not pencil out in the end.
“If we were to vote on your motion tonight, which we may because it's an open motion, I can't support it,” Smith Johnston told Voetberg.
She also raised concerns about a hiring freeze included in the proposal, which would halt planned hires for two new Centralia police officers and additional court staff. And she questioned the value of a property Voetberg proposed selling as well as whether one budget maneuver would hold up under legal scrutiny.
Voetberg’s proposal combines a total hiring freeze and cuts to some lower-cost and less-essential city programs with creative use of real estate excise dollars and the sale of a property recently donated to the city, which sits at the end of Alexander Street. According to Voetberg’s calculations, the changes would put the city in the black over two years with nearly $700,000 left in the city’s general fund at the end of 2028.
When asked by Garibay about concerns over more long-term health of the city budget, Voetberg said he was confident that banking on economic development was the better long-term solution, while also arguing the city should focus on balancing the two-year outlook.
“We don’t know what the future is going to be,” Voetberg said. “We're looking at a two-year budget right now. We know that this is what we have for the next two years, and we do want to be thinking about long term, obviously. But right now, we're we have a two-year budget set in front of us.”
Elements of Voetberg's proposal are also likely to still be considered by the council; however, it's unlikely they will be supported as the only mechanism for addressing the city’s budget shortfall.
For recent reporting by The Chronicle on the Centralia budget process, visit https://tinyurl.com/2fyf345w.
