Kent Mayor Suzette Cooke wants to increase the business and occupation (B&O) tax and add a $20 per year vehicle license fee to bring in more revenue to help balance the biennial 2015-16 city budget.
Cooke presented her proposed budget on Tuesday evening to the City Council, which will spend the next two months deciding whether to go along with the mayor’s plan or make its own changes. The council is scheduled to adopt the budget in late November or early December.
Councilman Bill Boyce asked Cooke if she looked at cutting costs rather than raising taxes.
“The first place I always look is where can we reduce expenses,” said Cooke, who added many cuts occurred over the last few years. “We have reached a state now that we cannot reduce anymore in departments without absolutely eliminating programs.”
Cooke proposed raising the B&O rate and lowering the business exemption from $250,000 of gross revenues per year to $150,000. She said those changes would bring in an estimated $3.4 million more per year to help pay for general government services and pay off city debt.
The tax increase also would pay to hire four more employees (at a cost of $400,000 per year) in the Finance Department to help handle the B&O program now overseen by two auditors.
Councilman Jim Berrios wanted more details on the reasons for more B&O program staff.
“We fully underfunded and were over our heads when we first implemented this,” Cooke said about the B&O tax adopted by the council in 2012 to help pay for street repairs. “When I look at the staffing of Bellevue and other cities of comparable size they have a lot more staff on board than we had projected we needed.”
The tax became effective in January 2013 and brings in about $5 million per year (dedicated to street maintenance) with $300,000 spent on two auditors.
The mayor also proposed a transportation benefit district to pay for street operations and maintenance with a $20 per year vehicle tab fee. That would bring in about $1.6 million per year starting in 2016.
Councilwoman Deborah Ranniger and other council members questioned the need for more taxes. The city’s asking voters to approve a $34 million bond measure on the Nov. 4 ballot to build a new police station. IF voters approve the bond, the property tax rate would be 19 cents per $1,000 assessed value or about $57 per year for a $300,000 home.
“My 30,000-foot concern is from a taxpayer’s perspective is we’ve got a police bond out there, a B&O (increase) and a car tab and that’s a lot of increases in one biennial budget,” Ranniger said.
The council plans a workshop on Oct. 14 to further discuss the B&O rate increase as well as the city’s troubles with tracking down businesses that aren’t paying the tax.
Cooke didn’t address the city-owned ShoWare Center’s financial problems during her budget presentation. City staff and council will discuss the arena’s budget problems at an Oct. 7 workshop. The arena has revenue losses of more than $2.4 million since it opened in 2009 and that figure could hit close to $3 million by the end of this year. The council sets aside $500,000 each year in the general fund budget to cover the losses.
The city’s overall general fund budget revenue is projected to be $81.3 million in 2015 and $83.6 million in 2016, according to the city’s operating statement.
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