Port Townsend City Council to consider using 'banked' tax-raising power on property taxes

By Evan Cael, Peninsula Daily News

11/24/07


PORT TOWNSEND, WA - The City Council plans to discuss on Monday taking measures to allow it to use an additional $466,000 in banked capacity, and raise property taxes, without a vote of the public.

Two special meetings have been called - on Monday and on Tuesday - to discuss and perhaps repeal a 2001 ordinance spearheaded by former city councilman Al Frank that requires a "nonbinding" vote of the people before using banked capacity, Port Townsend City Manager David Timmons said Saturday.

Both special meetings will be at 6:30 p.m. at City Hall, 250 Madison St.

The additional money would support the city pool and library, Timmons said.

Banked capacity exists when a municipality increases taxes by a smaller amount than it is able to.

The remaining, unlevied amount, or banked capacity, and can be levied in the future.

Timmons said that repealing the ordinance requiring a vote of the people before banked capacity is used would be necessary to use the unlevied tax capacity in 2008, because an election would not take place before the levy must be set.

The City Council faces a Nov. 30 deadline to set the 2008 property tax levy.

Two meetings are set because city ordinances can be repealed only after a second reading. The first will take place Monday and the second on Tuesday.

The city currently has $198,000 in banked capacity, but Timmons is not recommending that that amount be used.

In the wake of the state Supreme Court decision two weeks ago ruling unconstitutional I-747, the Tim Eyman initiative limiting annual property tax increases to 1 percent, Timmons said an additional $466,000 of banked capacity is now available to include in next year's tax bills.

With the court decision, the previous tax law allowing 6 percent annual tax increases stands.

"What's before council is options to still retain the $198,000 and utilize the $466,000 to finance the continued operations of the pool," Timmons said.

He said $156,000 is proposed to go to the operating cost of the pool, and $100,000 would go to match money raised by the local organization Make Waves!, which was created this year in an effort to build a new pool in the city.

Another $210,000 of the banked capacity would go into a trust fund for the city library's plans to expand the library.

If the $466,000 of banked capacity is used, a property owner with a $300,000 house in the city limits would pay $90 in additional taxes in 2008, Timmons said.

Gov. Chris Gregoire has called a special legislative session for Nov. 29, urging that a 1 percent annual tax increase limit be put back into place.

She has urged municipalities not to increase taxes by more than 1 percent and not to use additional banked capacity the Supreme Court's decision made available.

"I understand that it's a political issue in Olympia more than a reality here," Timmons said.

"People have reminded us that the city of Port Townsend did not support any of the Eyman initiatives. They rejected them all."

From that, Timmons surmised that the city residents don't agree with a 1 percent tax cap.

City Councilwoman Laurie Medlicott said she's concerned that the legislature could eliminate banked capacity during the special session.

She said she agrees with using banked capacity to fund the pool and the library - "that's good economic sense," she said - but wants the public to vote on it.

"I cannot support doing that without the city of Port Townsend going to the voters to approve use of banked capacity.

She said she'll vote against repealing the ordinance requiring a vote of the people before banked capacity is used.

"The solution to the whole mess is, we truly need to focus on a workable economic strategy and we at some point have to learn to live within our means," Medlicott said.

City Councilwoman Michelle Sandoval said she will vote to repeal the ordinance.

Se said that the council recently heard from a lot of citizens demanding that the pool be funded by the city, and although she said she's not decided what her feelings are about using banked capacity, "It can't be done the way the budget is right now," she said.

She added that she doesn't agree with the ordinance requiring a vote of the people to use banked capacity.

"I actually think it should have been [repealed] a long time ago," Sandoval said.

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Reporter Evan Cael can be reached at 360-385-2335 or evan.cael@peninsuladailynews.com.