City Council decides against property tax hike

November 16, 2010

By Warren Kagarise

NEW ā€” 8 a.m. Nov. 16, 2010

The anemic economy has prompted the City Council to decide against a property tax increase for 2011.

The unanimous decision holds the property tax rate at the 2008 level. The council followed a recommendation from Mayor Ava Frisinger to avoid a property tax hike for 2011. Members voted on the measure Monday night.

The city collects $1.38 per $1,000 in assessed value in property taxes.

The mayor proposed a $30.4 million general fund budget for next year ā€” a slight increase from the $29.8 million general fund budget in 2010. Money collected from property taxes accounted for almost a quarter of the general fund revenue in the 2010 budget.

The decision against a property tax increase means the city must continue to defer maintenance and building upgrades. Frisinger said the mounting repair bill is a cause for concern, but the tight budget does not allow for large-scale improvements.

Throughout October and early November, the council huddled in a series of deliberation sessions to adjust the 2011 budget. The final plan is due to be approved late next month.

Under state law, Issaquah and other local governments can only increase the property tax rate 1 percent per year.

Washington voters approved a Tim Eyman-backed initiative in 2001 to institute the cap. Courts later declared the measure unconstitutional, but state legislators reinstated the 1 percent cap in 2007.

Issaquah City Council members opened the door to a potential increase Nov. 1 as a step to offset the impact of liquor-privatization initiatives on the Nov. 2 ballot. The municipal budget for the upcoming year includes $210,000 from projected liquor profits and $110,000 from estimated liquor excise tax revenue.

Initiatives 1100 and 1105 sought to remake the state-run liquor system ā€” and slash the amount the state collected on booze. In the end, both initiatives failed.

“For those of you who were watching the last council meeting and for the council members who were here, I proposed that we make a 1 percent increase in light of the risks facing us on ballot issues, particularly around the liquor tax changes,” Council President John Traeger said before the unanimous decision. “They didn’t come to pass. The initiatives failed on the ballot, so IĀ  want to return to a 0 percent increase.”

Frisinger said the 2011 budget included projected liquor dollars because the city does not alter spending plans to account for a public vote.

The city left a projected $500,000 out of the budget because the funds depended on passage of a King County sales tax hike. Voters defeated the proposed tax increase by a double-digit margin.

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