Liberty Lake utility taxes

Candidate Question: Utility Tax

in Candidate Corner/Candidate Questions/Featured/Government and Politics

The Liberty Lake Gazette asked all 10 candidates the following question at the same time via email. The candidate responses are in the order they replied. Click on a candidate name to view their full profile.

This question came from a Liberty Lake Gazette reader.

How do you feel about the current Liberty Lake utility tax? Should it be removed, decreased or increased?

Bob Moore campaign photo
Bob Moore

The Utility Tax was established in October, 2010 with Council’s unanimous adoption of Ordinance No. 188 as a “temporary” measure to address projected General Funds deficits by fiscal year 2012. The provisions of the Ordinance stipulate that “City Council will annually review the tax rate to determine if a reduced rate may be possible before adoption of each annual budget”.

Several years ago, the Utility Tax rate was reduced from the original 6% to the existing 3% rate. In addition, several years ago City Council established that the Utility Tax revenues are specifically dedicated to streets maintenance, operations, and capital. It is anticipated that the Utility Tax will generate approximately $850,000 in fiscal 2019 for those purposes.

I have long been an advocate of “Zero Based Budgeting”, which means that each expenditure must be justified in the Mayor’s proposed Budget and in the subsequent City Council review and approval process.

Therefore, any decision on the Utility Tax must be considered in the context of the overall proposed Budget as It’s just one factor to be considered along with many others. In the past, I have never voted to increase the rate above the 3% level as there has never been sufficient justification to do so.

How do you feel about the current Liberty Lake utility tax? Should it be removed, decreased or increased?

Annie Kurtz campaign photo
Annie Kurtz

The City currently has three tax revenues to draw from—sales, property and utility taxes. Currently, the utility tax rate is 3% and collection of this tax contributes approximately $850,000 to the budget for the City in order to fund street preservation. Safe and well maintained streets should be a priority for our city. Without a sustainable alternative to funding street preservation and or other city priorities, I would not support a reduction or removal of this tax.

How do you feel about the current Liberty Lake utility tax? Should it be removed, decreased or increased?

Holly Woodruff campaign photo
Holly Woodruff
Like most people, I’d prefer to not pay any taxes! But that’s unrealistic. We want to have a community that’s safe and desirable, and that means spending money on public safety (police), roads, parks, and other city services. At this time, I’m inclined to keep the utility tax as is. Let me explain why.

With no income tax, Washington cities rely on sales tax, property tax, fees for licenses and permits, and for Liberty Lake (as well as Spokane and Spokane Valley), that also includes the utility tax. This tax was added during the Great Recession of the late 2000s, when the city anticipated a downturn in sales tax revenue from big ticket items like cars and RVs. Thankfully, Liberty Lake was able to recover fairly quickly in terms of revenue. However, the city still could use a more diverse tax base (see my answer to the question about economic development). Utilities are a recession-resistant sector of our nation’s economy. In a downturn, people may turn the heat down and be mindful of turning off lights, take shorter showers and use the microwave rather than the stove, but they’re still going to use utilities. Let’s not even think about giving up our cell phones! The utility tax is a stable revenue stream for Liberty Lake.

While the Salary Commission was active in the first months of 2019 (I am a Salary Commissioner for Liberty Lake), I researched pay scales for employees of other cities in Washington, not just the mayor and council salaries which was our mandate to consider. What Liberty Lake pays employees is in line with what other small cities pay when they have to compete with larger cities like Spokane and Spokane Valley for staff. If we want quality people, we have to pay a fair and competitive wage. The state minimum wage increases in January 2020 from $11.50 to $13.00 per hour, and that will have an impact on all salaries due to the “salary creep” phenomenon. Then we look at the terrific parks we have – Pavillion, Rocky Hill, the new Orchard – and how nice they look. That takes money. Our roads aren’t perfect but I can tell you they are much better than a lot of Spokane city streets and way better than the small city in Indiana where I used to live. That takes money. We want our city to be a safe place to live, work and play, and that takes a dedicated police force. Every city in the country is having trouble recruiting police officers, and Liberty Lake is no different. Recruiting, hiring and keeping quality and qualified officers and assuring they have the equipment they need to perform their duties – that all takes money.

Those are some of my thoughts on why I’d keep the utility tax as is for now. All taxes should be reviewed on a regular basis as part of the budget process, and I’m open to reducing or eliminating the tax if there is a way to replace the revenue (or if that revenue is no longer needed). City government should be good conservators of the people’s money, and work to assure that there is no waste in the use of our hard earned tax money. Thank you for the opportunity to answer this question.

How do you feel about the current Liberty Lake utility tax? Should it be removed, decreased or increased?

Shane Brickner

It should remain where it’s at. When I first got onto the city council, utility tax was a big topic. At that time, it was 6%. I supported dropping it down to 3%. I also encouraged and supported the use of utility tax dollars for street improvements, which helped show the community where their tax dollars are going. That 3% supports our continuing need for street maintenance and improvements.

How do you feel about the current Liberty Lake utility tax? Should it be removed, decreased or increased?

Cris Kaminskas campaign photo
Cris Kaminskas
When the utility tax was first approved during the fall of 2010, it was 6% and was not dedicated to anything in particular. The forecast looked bleak and this was a way to diversify our revenue stream and keep the City in the black. The rate was reduced to 3% for 2013 and dedicated to road projects. There is also a rebate program available if someone meets the criteria.

It is very important to keep our revenue stream as stable and diversified as possible. The Utility Tax, which provides an estimated $810K (9%) to the budget, is a stable source of revenue that we can count on to keep maintaining our roads. It is important to note that this tax is not just being paid by the residents of Liberty Lake, it is being paid by every business within Liberty Lake as well. This is an excellent way to make sure that they are also paying their share of the ongoing expenses. Sales Tax, on the other hand, accounts for more than 38% ($3.2M) of the City’s revenue stream and will be hard-hit if there is a down-turn in the economy.

On average, over the next 6 years, the City has estimated the cost of street maintenance to be $560K per year. This is in addition to over $30M in other street/transportation projects to be completed by 2024. Luckily, we have additional means to fill in the gap to pay for these projects – Real Estate Excise Taxes, Harvard Road Mitigation Fund (paid by developers), grants from the Transportation Improvement Board, LIFT, etc.

While I don’t like how the utility tax was first implemented and its lack of purpose, I fully support it today and don’t currently see the need for an increase given the other resources available. Overall, our streets are in very good condition, and it is important that we keep them that way. Good streets can make a difference for a business deciding to locate here or not, for a family deciding where to buy their home, and don’t forget the effect on our cars. We don’t want to be the next Spokane.

How do you feel about the current Liberty Lake utility tax? Should it be removed, decreased or increased?

Phil Folyer campaign photo
Phil Folyer
All revenue from the utility tax goes to the city’s street fund. The utility tax income along with matching funds from other sources have allowed the city to build 3 roundabouts, rebuild or repave several streets and add several traffic lights that are vital to our transportation needs. Given the use of these funds, I support the utility tax @ the current rate of 3%. As a council member, I would heavily scrutinize the projects using these funds to ensure it’s in the best interest of the city residents & businesses.

How do you feel about the current Liberty Lake utility tax? Should it be removed, decreased or increased?

In 2010 I opposed the implementation of the 6% utility tax because there was no stated specific purpose for it and the council’s amount that would be collected was incorrect. I was the only person to stand up and speak on this issue. In 2011 the council realized my figures used were correct and cut the tax in half to 3%. Upon taking office as Mayor in 2012, I have consistently used the funds collected only to maintain and rebuild existing streets. Going forward, I will do exactly the same. Our Street department’s efficient use of this money and the money that is used to match state funding for construction is quantified and offers great community benefit.

Should the tax be increased, decreased or removed? I have stated in the past that funding is needed to support our infrastructure and that funding needed should be supported by this tax. Almost 50 % is paid by our businesses whose employees use our roads. The balance is paid by our local citizens. To adjust it to match our needs in streets, I have proposed on several occasions that we use a cafeteria plan on collecting the tax. A cafeteria plan allows the tax to be adjusted for each of the components Gas, Electric, Garbage, Cable and Phone. Having this in place allows us to collect 2% on gas, 2% on electricity (the mainstay commodity for our businesses and homes) while keeping in place the 3% tax on the other components.

Finally, the Utility Tax has a senior and/or disabled low-income rebate policy so those less fortunate have the opportunity to spend their saving on food, clothing and shelter.

How do you feel about the current Liberty Lake utility tax? Should it be removed, decreased or increased?

Dg Garcia campaign photo
DG Garcia
I believe that the current 3% reduction in the utility tax was the appropriate decision for the leadership to make in 2012, having levied an initial 6% tax during the great recession. Looking back at the original imposed 6% tax, in October 2010, I recognize that it was a tough decision, and the discussions with the stakeholders were probably some of the hardest. Sometimes the most challenging choice to make is the only choice available. In the end, the decision-makers made the right decision for the city based on the financial position the city faced at the time—the unforeseen financial crisis was unavoidable.

To educate me and others who may not have been a part of Liberty Lake during that time and to remind those who were initially affected by the negative impact of the imposed tax; our economic sustainability takes on many facets. Decision-makers are required to be knowledgeable and work alongside the professional staff of finance experts to determine, the how, when, and why of our city’s spending requirements.

Fortunately, the city has recovered from the previous crisis of 2010 and has built somewhat of a financial cushion, placing us on par with growing and developing cities, protecting our standing and viability. I consider that a plus in the overall scheme of things and would neither remove or decrease the current utility tax, for that reason. There should be no reason to increase taxes. However, we must all consider the importance of having diversified funding sources, if we are to have learned anything at all, especially during unpredictable times. Even with the best professionals and conscientious financial stewards, Liberty Lake was still not immune in 2010.

However, nothing shall be decided without the input of our community stakeholders—in the end relative to how we acquire and spend the city funds, ultimately impacts our entire community’s quality of life.

We are in a comfortable position of financial security at the moment. I promise to work diligently with the other members and our entire community if elected. We must keep our eyes on the prize, by continuing to ensure that new revenue funding sources flow into the city. The efforts of our leadership to ensure that our resources are used wisely and that our coffers are more than adequate to meet our everyday and unforeseen needs, in the future, is required. I want to be part of that stewardship moving forward—a considerable responsibility but an opportunity I am ready to take on.

No response: Dan Dunne, Tom Stanley

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