Everett residents may be asked to help city budget with more taxes
EVERETT — City leaders are warning that Everett’s budget is nearing the point of having to cut services if it doesn’t take new steps to fix its cash flow.
An answer recommended by Mayor Cassie Franklin is to get a property tax lift onto the ballot, and to do so as soon as August. Council members weren’t so sure.
The city’s expenses continue to outpace revenues, leaving an annual deficit.
Faced with a fast May deadline for the City Council to decide on an August ballot measure, Franklin forewarned: “I want to be very clear, with the level of deficit we are facing, there will be no other options than significant program and service cuts for 2021.”
The omen came at a Feb. 26 City Council budget workshop. Three other ideas introduced at the meeting involve altering or adding taxes for services:
One idea is to help pay for city parks with a new property tax, known as a parks district. Creating it would require voter approval.
Another is to disband the city’s independent library system and merge it into the regional Sno-Isle Libraries. The concept has a few mismatches with Sno-Isle, and would have Sno-Isle’s tax rate be newly charged to city residents.
A third relates to Everett Fire. Two ideas are to either merge the city’s fire department with a nearby district, or to change its structure to separate the city-funded fire service into an independent taxing authority.
The quickest option to add more revenue, though, Franklin noted, would be to ask voters for a temporary property tax lid lift to bring extra money into the city.
The city has a $13 million deficit to figure out by 2021; it dealt with similar deficits in prior years by tightening itself further. City administrators say there are no good options left to trim.
Taking a fire district change to voters could take three years to develop; a parks district, two years.
No program was called out explicitly for cutbacks, but on the city’s worst case scenario list of options are the senior center, cultural arts, the city’s cable TV channel, parks, and having a city website, Franklin
indicated. She called the list “scary.”
On top of these services, the city this year will spend $5 million in jail fees, $2.9 million for 911 services and $2.8 million in insurance. These are deemed non-discretionary costs, there’s no easy way around them.
A few large city services fall outside the city’s day-to-day budget and don’t affect the deficit. Everett Transit and the city’s golf courses operate on their own budgets as separate enterprises.
The city is preparing to survey the public with a poll on what people say is most important to them. The poll also would help inform voters the city is facing financial challenges, Deputy Mayor Nick Harper said.
Everett is one of the few cities of its size with its own city library system and fire department.
A property tax lid lift could be an up to 5 percent add-on to property tax bills. Even if voters approve this, it wouldn’t solve the structural deficit alone, city finance director Susy Haugen said at the meeting.
The city isn’t blind to its budget situation. It’s had to solve internal deficits each year since at least the Recession.The city’s made almost $105 million in budget cuts since 2010, from a tally by the finance office.
How would the concepts work?
A parks district tax could be dedicated to raise money for parks operations, or be limited to a cause such as improving parks.
There are two flavors to it: A parks district or the similarly named Metropolitan Parks District. While the city doesn’t plan to do this, a Metropolitan Parks District can charge as much as 75 cents per $1,000 in property value. Doing so could raise $15 million.
Parks director Lori Cummings said she hasn’t found another city charging the whole amount. The city of Seattle, for example, charges a rate of 48 cents.
The Parks Department runs on a $13.9 million budget.
Merging Everett Fire with a nearby department was floated at the meeting. Another is to reshape the city department’s governance into a fire district, which gives it the ability to independently charge property taxes. Right now, except for its EMS tax, the fire department is a function within the city budget.
Fire Chief Dave DeMarco didn’t present merging with South County Fire, which borders the city, but did present the option of pairing up with Mukilteo Fire or Paine Field’s fire service.
Merging libraries poses some challenges. For one, Sno-Isle Libraries is not a union employer, whereas the city’s librarians are under a union, Everett Libraries director Abby Cooley told the council.
Government officials almost universally point to the voter-approved cap on property tax increases, 2000’s Initiative 747, as causing budget struggles.
The city could have collected $185 million over the past 18 years if the cap wasn’t in place, a presentation slide showed.
Today, Everett’s property tax rate is $2.05 per $1,000, not considering its 50-cent EMS levy. In 2002, it was much higher — at $3.60 per $1,000. The rate is set by two factors: How many properties are in town, and how valuable they add up as a whole. Across Everett, there’s $18 billion worth of buildings here today, compared to $7 billion when the city charged $3.60 per $1,000.
Everett Transit itself isn’t sitting pretty. The status quo will lead it financially aground in the long-term future, city officials have said.
Franklin has a team looking for solutions. One option given is to merge Everett Transit into Community Transit; another is to keep it as a city-run bus system but change its service plan.
A decision on which way to go on Everett Transit may be made by year’s end, city executive director Paul Kaftanski said. He’s leading the research on transit’s future.
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