It may not have included the tectonic shifts of last year’s budget, but the Millwood City Council aligned the plates representing municipal revenue and spending at a special meeting last week – with three full days to spare before the state deadline.
By a unanimous 4-0 vote – Council Member Brian Ellingson was not present – the City Council approved a budget for fiscal year 2012 on Dec. 28 in a discussion that took less than five minutes. The final numbers going into the new year have estimated revenue at $783,556 while expenditures are projected at $780,485.
The totals represented an improvement over the original outlook presented at the first public hearing on the budget during the Nov. 7 City Council meeting. It was then that Finance Director Debbie Matkin spoke of a potential shortfall in the vicinity of $10,000, mostly attributed to a decrease in property tax and natural gas tax revenue.
“We’re trying to be as efficient as possible without raising taxes,” said City Clerk Tom Richardson in November. “But we are seeing a reduction in tax revenue.”
By December, the proceeds from property tax were showing signs of improvement while sales tax numbers were only $150 off from the city’s projections for 2011. The city closed the gap for 2012 by reducing the hours of a code-enforcement officer – responsible for writing up everything from discarded vehicles to cluttered yards – and reducing the amount paid for employee benefits.
The budget landscape for this year will also include a 2-percent utility tax on brokered natural gas that is expected to generate over $12,000 annually. The city has taxed wholesale natural gas since 1991 – a levy that has only applied to the Inland Empire Mill. The mill – the city’s namesake and most prominent commercial site – has reduced dependence on natural gas over the years. The city once received over $100,000 from the utility tax, but has seen revenue decline to just under $30,000 in 2010 and around $23,000 in 2011.
Richardson estimates that the city has lost approximately $60,000 in tax revenue over the past 20 years by not implementing a tax on brokered natural gas.
Millwood has also begun collected a real estate excise tax – or REET – which applies to any property transaction within the city and is anticipated to raise around $12,000 a year. The City Council approved REET in August – becoming one of the last cities in Washington to utilize the tax – and saw its first disbursement in October. Richardson said REET accounted for $3,200 in 2011 with revenue ticketed for a new industrial-strength lawnmower.
While new taxes on natural gas and real estate sales made news in 2011, the city’s revenue stream changed significantly with an increase in water and sewer rates approved at the conclusion of 2010. For the first time since the mid-1990s, Millwood announced a hike in fees as it looked ahead to capital improvements in the city-run water and sewer utilities. The 18-percent jump meant a change in the monthly water bill from $30 to $35.40 while sewer charges went from $14.70 to $17.35.
“I think most people have been very understanding about the increase,” Richardson said. “Some asked us how we’d been running this place without adjusting taxes.”
A review of the city’s water department is currently underway and should be completed by spring. Richardson said the study of costs, capital facilities and efficiencies “would likely result in a rate increase.” The city has not adjusted water overage charges since 1981.
In describing a trend of shortages in the water fund, Matkin said the city accessed around $107,000 from a reserve account in 2011 to cover the shortfall while another $61,000 will be utilized this year, bringing the fund to its minimum reserve level of $185,000.
The city currently has a 6-percent utility tax on electricity, but no toll on phone, cable or waste management. When considering the tax structure of Spokane and other cities throughout Spokane County, Richardson said Millwood is a comparable bargain.
“I think most people here understand that it’s one of the cheapest places to live in the county,” he said.
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TheSpokane Valley News Herald