Enumclaw council mulls new utility, higher property tax

Enumclaw property owners can anticipate an increased tax bill in 2018, if current plans by city administration are adopted.

Enumclaw property owners can anticipate an increased tax bill in 2018, if current plans by city administration are adopted.

The entire budget process is being played out at City Hall and will continue until the seven-member City Council gives its formal blessing to a spending blueprint for the coming year. It has been anticipated the final budget OK will come during the council’s Dec. 12 meeting.

But there are two wild cards in the works: one could change the property tax rate and the other could alter the date of budget adoption.

The drafting of a city budget has been in the works since August, taking into account myriad revenue streams and even more itemized expenditures. Among the primary sources of city income are property taxes, sales tax collections and the taxes levied on city utilities.

Each of those revenues have “shown signs of positive economic activity,” according to text found in the city’s preliminary 2018 budget.

Figuring the city’s share of property tax assessments takes numerous factors into account, beginning with the presumed value of all property (land and buildings) within the city limits. That value, established by King County, is more than $1.36 billion for 2018, or about $100 million more than in 2017. There’s a maximum tax rate the city can charge and is influenced by rates assessed by both the local fire department and the King County Library District.

When the municipal math was completed a year ago, Enumclaw property owners were left paying a rate of $1.48 for every $1,000 of assessed value. So, the owner of a $300,000 property paid $444 to the city this year.

The preliminary budget for 2018, forwarded by Mayor Liz Reynolds and now in the hands of the council, recommends a rate of almost $1.75. That is the maximum rate allowed under Washington law and if it were to be adopted the bill for 2018 – on the same $300,000 property – would be $525.

If all that holds true, the city would collect about $511,000 more in property taxes in 2018 that it will this year.

On another financial front, the city anticipates taking in more in sales taxes next year, due to the healthier economic outlook.

The preliminary city budget estimates sales tax receipts of $2.82 million for 2018, or about $145,000 more than this year.

“Enumclaw continues to be quite healthy from a sales tax perspective,” the preliminary budget states. It is noted that “tax receipts continue to be primarily driven by car sales, restaurants, construction and a variety of retail, with an increasing amount of online sales.” Automobile sales are the largest contributor to the pool of sales tax collections.

A third source of revenue comes from the handful of city-owned utilities – from natural gas and water, to garbage collection and sewer services. Aside from the rates charged, the city adds a tax on its collections.

City residents can anticipate paying more here, as well, but not due to a tax increase. The city figures on increasing rates for water, sewer and solid waste; when the rates goes up, tax collections increase.

TAX HISTORY AND UNUSED CAPACITY

For years, cities in Washington were allowed to bump property tax rates by as much as 6 percent annually. That changed in 2001 when voters dramatically lowered the limit. Initiative 747 set the maximum increase at 1 percent or the level of the Implicit Price Deflator, whichever is lower. The IPD reflects the economic growth of a region and, in September, it was measured at 1.55 percent. So, Enumclaw began the 2018 budget process looking at a 1 percent increase.

But there’s another factor that comes into play. City Administrator Chris Searcy explained that the fire department and library district are assessing taxes at rates lower than allowed. The fire district is collecting $1.48 per $1,000 of assessed value, rather than $1.50; and the library system is collecting 37 cents per $1,000, rather than 50 cents.

That makes 15 cents of taxing authority not being used. The city can claim it as its own.

THINGS COULD RAPIDLY CHANGE

Another factor possibly influencing 2018 property tax rates is the ongoing proposal to form a municipal stormwater utility. Searcy said city administration will put the suggestion on the council’s Nov. 13 agenda.

Presently, stormwater collections are paid through the city’s general fund. Nearly all cities and towns in the region have a separate utility to pay the cost.

If a new utility is formed, it will add another layer of expense to both residential and commercial properties.

If there’s agreement to create a new utility, Searcy said, the proposed 2018 tax rate would drop slightly.

TIMING IS EVERYTHING

Enumclaw City Council members have traditionally adopted a budget during the first meeting of December and that has been on the calendar this time around.

But that could change, Searcy said, depending upon the outcome of two political races. Steve Cadematori and Anthony Wright were previously appointed to their seats on the council and are on the Nov. 7 ballot. If it appears they will be unseated, the council will likely look to adopt a budget by Nov. 28; if it appears they will remain on council, Searcy said, the original schedule will be followed.

The goal is to avoid a situation where two brand-new council members – who had not been part of the budget process – would be voting on the 2018 spending plan.

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