Kent City Council approves property tax hike after heated debate

4-3 vote to use all of city’s banked property tax capacity

After a heated exchange between members, the Kent City Council voted 4-3 on Tuesday night to raise property taxes as high as possible next year.

The council approved using the city’s full banked property tax capacity of $6.4 million, a jump of 28 percent. That will cost the owner of a $300,000 home about $105 more in taxes next year, according to city documents.

Council President Bill Boyce, Mayor-elect Dana Ralph, Dennis Higgins and Les Thomas voted for the tax hike. Jim Berrios, Brenda Fincher and Tina Budell opposed it, as they each preferred going with Mayor Suzette Cooke’s proposal to use $2.3 million in banked capacity next year to cover a general fund budget gap rather than the full amount to address a fiscal cliff expected to hit the city in a couple of years. The lower amount would have jumped taxes about $37 next year on a $300,000 home.

The council informally agreed at its Nov. 21 meeting to use the full amount. What exactly occurred at that meeting became a hot topic of discussion among the council for about 45 minutes prior to Tuesday’s vote.

“I’m going to be honest, it wasn’t fully discussed,” Budell said about last month’s meeting. “I sat here and I was like, what happened? We had talked about $2.3 million and then all of a sudden Thomas changes his mind and says let’s go for the full monty and goes $6.4 million and now it goes to Operations (Committee) and this is our only time to discuss this?”

Boyce responded a few minutes later to Budell’s comments.

“I think it’s important that this council has always been about transparency,” Boyce said. “It disturbs me when comments are made about how people recall things. We did have dialogue about the options. We focused on the $2.3 million the mayor had made a recommendation on and we talked about the high amount.

“We have council members up here – we don’t have to agree – but when you make comments about doing something that is sneaky or under the table, that really disturbs me. … I can vividly remember the conversation and we did agree on the $2.3 million and then Councilmember Thomas had some more thoughts about it and wanted us to reconsider, and we talked about it during other business and that’s when we made the change.”

Kent has banked capacity (or money saved from taxes not levied) because the city reduced its property tax levy by $1.00 per $1,000 assessed valuation in 2011 after voters in 2010 approved the formation of the Kent Fire Department Regional Fire Authority (now Puget Sound Fire), which levies a property tax of $1.00 per $1,000 assessed valuation. The use of banked capacity allows the city to raise property taxes above the 1 percent annual state cap imposed by Initiative 747 approved by voters in 2001.

Berrios also had concerns about how the council approved using the full amount at last month’s meeting.

“There is a perception that something happened that people didn’t understand that day,” Berrios said. “There was kind of a look around the bench up here and there appeared to be four council members in favor (of using $6.4 million) with the head nod. … My reaction was what just happened here? What did we just do? It wasn’t a vote, it wasn’t a discussion.”

Ralph joined the debate.

“The thing we have not had in this discussion tonight is the context of why we started talking about using this banked capacity,” Ralph said. “We have a fiscal cliff coming. We know that there is nearly $10 million that this city will be losing over the next several years and this action is a big step in helping us with that.”

The city faces with loss of state revenue of about $4.7 million per year in 2020 from the Panther Lake annexation sales tax fund. City officials also expect to lose the streamlined sales tax mitigation funds in the near future of about $5 million per year that helps compensate Kent for revenue lost when legislators changed the state in 2008 from an origin-based system for local retail sales tax to a destination-based system, gutting the tax revenue the city received from its large warehouse district.

Budget approved

The council also voted 5-2 to approve the 2018 budget adjustment. Berrios and Budell voted against the approval, primarily because of the large increase in the property tax.

The budget adjustment also includes $2.4 million to help create a quiet zone in downtown Kent with improved safety features at railroad crossings so train engineers no longer have to blow their horns while speeding through town.

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