We are incredibly proud that the city of Federal Way has been able to maintain the lowest tax rates of its South King County neighboring cities for 11 out of the past 12 years.
It’s a huge badge of honor locally, and it speaks to our desire to keep our residents happy while providing the highest level of service.
But we are losing ground to our neighboring cities.
The passage of Initiative 747 in 1997 locked in a 1-percent limit to the maximum increase in tax revenue that can be levied through property taxes. When I-747 took effect, Federal Way’s neighboring cities got locked into higher rates than us.
That has caused Federal Way to fall behind in keeping up with inflation over the years, which has increased by more than 1 percent. The income disparity has affected our ability to build and maintain the human capital and institutional knowledge in our city departments needed to deliver a high level of customer service. We will continue to lose good people to other cities who can pay higher wages until we find a way to close the gap.
We are still below our staffing levels we maintained prior to the economic downturn.
Additionally, we are facing a budget shortfall of about $854,000, due in large part to increases in the SCORE Regional Jail costs totaling $680,000; implementation of minimum wage increases; and other required and mandatory costs.
Some may point to the investments made in our downtown when it comes to our current budget shortfall, but the two are not directly connected. Nearly all of those funds for the significant and critical investments have come from the capital budget, not the ongoing operational fund.
Those investments were, and continue to be, critical in resurrecting our dying downtown.
Now, however, we have come to the point where we require a new source of revenue, and there are few options on the table. By addressing a structural imbalance that has been locked into place, implementing a proposed 7.75-percent utility tax on the Lakehaven Water District will put us on a sustainable budget path.
Also, another source of revenue I’m pursuing is removing the cap on the admissions tax, which will generate about $218,000 per year, as well as other cost-saving measures to close the gap.
We arrived at this difficult decision to move to implement the tax after department directors went through their respective budgets and exhausted all the cost-cutting options available to them. Also, out of respect for Lakehaven, I met with their leadership to talk about the uniform application of the utility tax.
It is our firm belief that we are on solid legal footing with this move to fairly and uniformly apply the utility tax on Lakehaven. In facing this structural imbalance, a course correction needs to take place now before we even take a look at the 2019-2020 budget.
We are all in this together, and we have long considered Lakehaven a valuable partner for many years.
As I always say, “I work for you!” The city needs the appropriate resources to be able to do that in a comprehensive way and deliver on that promise.
With this budget amendment, we will be well on our way to providing the level of service every resident in Federal Way deserves.
Jim Ferrell is the mayor of Federal Way.