Council holds property tax rate level amid recession

November 24, 2009

By Warren Kagarise

City Council members decided against a 2010 property tax increase last week. With the Nov. 16 decision, officials held the property tax rate at the 2008 level. The council also nixed a 1 percent increase last year on account of the economic downturn.

Municipal finance officials estimate the city will take in almost $7 million in property tax revenue next year. Key sources of revenue for the city — sales tax revenue and building permit fees — waned during the recession and assessed property values dipped as well. The downturn hobbled the city and forced officials to make program and staff cuts.

Mayor Ava Frisinger last month proposed a $29.8 million general fund budget for 2010. The proposed spending plan contained no property tax or fee hikes. In a unanimous decision, the council voted last week to maintain the property tax level.

Frisinger requested the 1 percent hike in past years, when the economy was in better shape. But she halted the practice in the 2009 budget proposed in the wake of the economic meltdown.

In 2001, Washington voters passed a measure proposed by tax foe Tim Eyman to limit annual property tax increases to 1 percent. Courts later declared the measure unconstitutional, but the Legislature reinstated the 1 percent cap in 2007.

Issaquah council members will shape the 2010 city budget during the next few weeks, and then adopt a spending plan by late December.

Input from taxpayers was minimal, and council members heard from a lone resident during the Nov. 2 public hearing ahead of the property tax vote.

Before the Nov. 16 decision, former Councilman Hank Thomas said keeping the tax rate at the existing level amounted to a tax increase. Thomas asked the council to discuss the measure further — a directive that council members did not follow.

“We can look at it in many ways, justify it in many ways I’m sure, but when the state law would typically require us to decrease the property taxes and we decide to hold them steady at last year’s level, that represents, in my mind, a tax increase,” Thomas said.

Issaquah Highlands resident Chris Hawkins also addressed the City Council during the Nov. 16 meeting. He urged members to pass the legislation.

“This is not going to result in any property tax increase,” Hawkins said. “It’s going to keep the property taxes level.”

He referenced moves taken by city officials throughout 2009 to trim expenses. Officials shrunk the size of the city staff by about 10 percent — or 27 positions — through layoffs, a hiring freeze and a voluntary severance program.

“The city has already made very considerable cuts in staff and also in programs,” Hawkins said.

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