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Higher taxes possible as city grows
By ERICA JAHN
The city of Federal Way can maintain existing services within current revenue levels, but with some city officials saying new services and facilities must be provided to keep up with growth and citizen requests, tax increases are looming on the economic horizon.
We cant just maintain the status quo, Deputy Mayor Dean McColgan said.
City manager David Moseley presented the 2003-04 budget to the City Council Tuesday.
The council has some tough decisions ahead about what to fund and what to cut, but things could be worse.
Weve been very fortunate as a city. The city manager made it clear that while other cities are looking at real cuts, were able to continue existing services ... all within existing revenue, Councilman Eric Faison said. Were still able to make it work.
Councilman Mike Park agreed the city is fortunate, but added the council must carefully consider which new buildings or services to add and how to go about funding them.
Some capital projects we have to look at very carefully, he said. Weve got to have a lot of discussion still.
The proposed operating budget is expected to increase by 1.8 percent in 2003 and not increase at all in 2004. That equates to $40.38 million next year and $40.37 in 2004.
City officials are proposing a capital budget of $177 million over six years, which comes out to about $55.5 million in 2003 and $19.3 million in 2004, though the majority of the capital budget will be covered by grant money.
Combined with other expenses, like bond retirement and contingency funds, the proposed budgets are $120.7 million in 2003 and $75.9 million in 2004.
The public safety department takes the largest slice of the operating budget this year, as it has in years past, at 38.8 percent.
The amount of money allocated to the police department has risen steadily as the department has grown. Officials are recommending about $15.7 million in 2003 and $16.3 million in 2004, a 2.8 percent increase to the department over last year.
New police services proposed include two new school resource officers and two new police officers, which would cost about $220,000 a year.
Combined with some shifting within the department to convert three administrative positions and a lieutenant to patrol, the department could add six more cops one per squad to the streets.
The second-biggest operating budget expenditure, but still half that projected for police, is proposed for the public works department to cover street improvement projects.
The city is proposing to allocate 18.6 percent of the 2003-04 budget, or about $7.6 million in 2003 and $7.7 million in 2004, to public works. Thats up 2.4 percent from last year.
The biggest moneymaker for the city is the sales tax at 24.6 percent of total revenue, though city officials said the city receives only a small portion of the total sales tax consumers pay at the register. Sales tax is expected to bring in almost $11 million in 2003 and $11.3 million in 2004, up about 11 percent from last year.
Property taxes are the second-biggest source of revenue at 17.4 percent, or almost $7.8 million in 2003 and $7.9 million in 2004. Thats an increase of about .7 percent over last year.
Again, city officials said the city gets only about 11 cents for every dollar property owners pay. The rest goes to Federal Way Public Schools (34 cents), the state (24 cents), fire and emergency medical services (14 cents), King County (12 cents) and the library and port (5 cents).
The citys utility tax provides almost 15 percent of the budget, or almost $6.5 million in 2003 and $6.7 million in 2004, an increase of 4.3 percent over last year.
Total sources of revenue are projected to be about $144.5 million in 2003 and almost $96.8 million for 2004, an increase of 28.6 percent over last year.
Last January, the council directed staff to draft a list of priority capital improvement projects. Without raising taxes, the city could pay for about $28 million, which would mostly cover all the top priority capital projects.
To cover new projects, city officials would have to raise taxes. To that end, the 2003-04 budget proposal includes funding options to cover new expenses, should the council seek to undertake them.
Among new services the council will consider, assumption of the Kenneth Jones pool would cost the most at about $300,000 a year.
Other additions include a community development plan reviewer and a traffic engineer to help streamline the permit process, which would cost about $175,000 a year.
To cover additional expenditures, the city could implement up to a 5 percent admissions tax on entertainment venues in the city, which it never has used. At 5 percent, the tax could bring in between $550,000 and $650,000 a year.
The council also could pass a 10 percent permit fee increase, which would bring in about $120,000 a year and could cover about 70 percent of the improvements to the permit process.
The city could ask voters for a property tax lid lift or excess levy to raise property taxes.
City officials expect to free up about $1 million a year in real estate excise taxes by paying off the Celebration Park acquisition bonds early.
The budget proposes to continue the 3.5 percent utility tax and allocate 2 percent to transportation, 1 percent to parks and .5 percent to a cops, court and city hall building.
To cover additional capital projects, the city could add the final 1 percent onto the utility tax, which officials expect would bring in between $6 million and $8 million.
Councilwoman Linda Kochmar said shes not convinced everything in the baseline budget is necessary. She wants city staff to dig around and see if there are projects the city has budgeted that could be done later to free up money to do other, more important things now, like assume responsibility for the Kenneth Jones pool.
I want to see what projects are being planned and see if we have to do them right now, she said.
Councilman Mike Hellickson called the proposed budget ridiculous.
The last thing you do in a recession is raise taxes, he said. People are getting laid off, people are having a hard time making ends meet and were going to raise taxes? We should absolutely bear in mind that families are struggling.
Faison said the council has tough decisions to make in the weeks to come.
Not everyone supports every service. One says keep the library open but close the pool because I dont use it. The other says close the library, he said. Its hard to get a clear majority on any one social service.
All things being equal, Faison said, its hard to justify buying one big-ticket item at the expense of everything else.
Its difficult as an elected official to balance the competing to demand, he said. Its a gut feeling, whats best for the community as a whole.
Park said the council must carefully weigh the need and value of new projects.
Weve got to look at the big picture, not just project by project, he said.
Staff writer Erica Jahn can be reached at 925-5565 and firstname.lastname@example.org