The Mercer Island City Council approved a series of tax and fee increases to balance the city’s biennial general fund budget for 2013 and 2014, at its regular Nov. 19 public meeting at City Hall.
The Council voted to approve various tax and fee changes for the next two years. Those changes mean increased property and utility taxes for Island homeowners and fee changes for some city services related to building permits and related services. The amount of money expected to be generated by the increases will balance the city budget.
Just one person came to comment on the upcoming tax increases. Islander Carv Zwingle reminded the Council that many Islanders are living on fixed incomes.
“These incremental tax increases may not mean a lot to you, but they do to us,” Zwingle said.
Prior to the vote on Nov. 19, the City Council went over the draft budget in prior meetings. The review brought more cost savings through cuts and deferred spending on new projects or upgrades to ease the burden on tax payers.
As a result, the City Council deferred or eliminated $3.6 million of capital expenditures that included the First Hill drainage system extension, water system improvements and the East Mercer Way sewer replacement project. City staff also pulled out $148,000 by delaying replacements to the city’s fleet, technology upgrades and more.
The Council approved a series of ordinances to institute the various fees and tax increases, including: a property tax increase of 1 percent; a new uniform tax rate on water, sewer and storm water utilities of 3.9 percent; rate increases for both city- and county-furnished services; permit fee increases; and an increase to the city’s ambulance transport fee.
The figures in the table represent the impact of these tax changes on an Island homeowner with a home with an average assessed value of $700,000.
Property taxes will increase by just under $70 for the average homeowner next year and an additional 7 percent, or about $10 more, in 2014.
Besides the newly approved taxes for the fire station and rescue truck, the 1 percent increases are a direct effect of lower tax revenues and higher costs, Corder said.
City financial planners had grappled with lower real estate excise taxes revenues than they expected this year, particularly from the sales of higher-end homes.
Up until August, no homes had sold for greater than $5 million this year, leaving the city worried for future years. The number of sales did pick up, however, in the late summer, with one home per month selling at $5 million or more since August.
Eyeing this trend, the city and the Council have been actively looking at ways to reduce expenses for some time. According to the city finance director, Chip Corder, the aim was to make up any shortfall with 50 percent new revenue sources and 50 percent from reducing costs.
“It ended up that we reduced expenses further than the 50 percent we planned for,” he said.
“We have already cut $4 million over the past four and a half years,” he added.