Kenmore’s double tax increase fails to offset record deficit | Letter
March 8, 2013 · 1:39 PM
Two new taxes, one on residential water bills amounting to $423,000 per year for the city in revenue and a new car-tab tax of $300,000 per year, were not enough to offset Kenmore’s record deficit in the 2013–2014 budget. An additional $400,000 was removed from capital funds, Real Estate Excise Tax, to balance the budget.
Kenmore had enough unused taxing authority in property and utility taxes to cover the tax increase but instead elected to broaden its taxing authority with the two new taxes. This will make it easier to raise future taxes without voter approval and undermines the principle that there should be accountability through a cap on taxing authority.
Without the tax increases and the $400,000 depletion of capital funding, the 2013-2014 operating budget deficit is a record $1.6 million.
As promised during incorporation in 1998, the operating surplus was our primary source of infrastructure funding for local roads and parks, among other city expenditures. During the first 10 years the surplus amounted to $27.6 million; $17 million of which was spent on City Hall and $10 million on Kenmore Village. That surplus has steadily eroded during the past six years into a deficit that not only requires substantial tax increases but also the depletion of needed local infrastructure funds. The exact opposite of what the financial plan promised voters at incorporation.
Prior to the recession, total revenue in 2006 of $10.3 million has increased to $10.8 million per year in 2013 and 2014 respectively. During this time annual expenses of $8.1 million in 2006 have increased to $10.6 million per year.
Likewise, the direct costs of salaries and benefits have increased from $1.4 million in 2006 to $3 million per year in 2013 and 2014 respectively.
As a small bedroom community, Kenmore resident’s now have to pay 74 percent of the city’s total revenue.
This is much higher than most cities where local residents normally pay less than half of their total revenues. As operating costs continue to rise unchecked, the Kenmore City Council has nowhere to turn for funding but to local residents.
Yet the council continues to insist that there is no lack of surplus or deficit problem.
John Hendrickson is a former Kenmore City Councilman.