Council approves maximum allowable tax hike

Unanimous vote boosts revenue from property taxes, EMS levy to keep up with rising costs
By Dan Aznoff | Nov 30, 2017

Citing the lack of a utility tax, members of the Mill Creek City Council justified a 1 percent increase in the city’s share of property taxes collected by the county and a jump in the Emergency Medical Services (EMS) levy to keep up with increased costs.

The increased bill reflects the 12.7 percent increase in the assessed value of the average home in the city. The approved tax hike will boost the tax bill for the owner of a $400,000 home in Mill Creek by less than $13.50.

Following an unexpectedly quiet public hearing, the council approved the recommendation submitted by City Manager Rebecca Polizzotto and Peggy Lauerman, the director of Finance and Administration, to boost the rate by the highest rate allowable.

Councilmembers justified the boost with a reminder for residents at the meeting on Nov. 7 that Mill Creek is the only city in southern Snohomish County that does not add a monthly utility tax to homeowner expenses.

The regressive utility tax has been a hot button for the council for the past two election cycles. Mayor Pam Pruitt listed the city’s ability to avoid a utility tax as one of her accomplishments from her recently concluded four-year term on the council.

Edmonds, Mukilteo, Bothell and Everett all impose a utility tax on residents. Councilmembers Mark Bond and Mike Todd estimated the lack of a utility tax saves Mill Creek residents an estimated $30-$40 in their monthly budget.

The Seattle City Council approved a plan that will hike utility taxes for residents an average of 5.2 percent per year for the next six years. The tax for the average household in Seattle will jump from $181 to $242 in 2023, according to figures released by Seattle Public Utilities (SPU).

The proposed increases to the property tax and EMS levy in Mill Creek were included in the 2017-18 budget approved by the council last December. Polizzotto said the additional revenue was necessary “to keep up with inflation and personnel cost increases.”

“In Washington we do not have a rate-based tax system,” Polizzotto told the council. “We have a budget-based tax system. That means we are limited as a local government from generating more income over and above 1 percent than what we generated last year.”

Despite positive indications from the local economy, the city manager said it would be “premature to alter the budget tax levy assumptions at this point in the biennium.”

A major portion of the $821,000 in revenue collected during the first nine months of the biennium were the result of one-time revenues, such as building permits and plan check fees, and do not reflect on-going sources of funding, Polizzotto explained to the council.

She said the new tax was proposed in conjunction with conservative estimates for income from sales tax revenues and expanded passport services.

“Financial performance for the remaining 15 months of the biennium is an unknown, and management believes it would be premature to alter the budget tax levy assumptions at this point in the biennium,” Polizzotto said.

Lauerman said the projections were made without the increase of sales tax revenues from the newly-opened Arena Sports complex.

Polizzotto noted that only one-third of the estimated $183,326 for personnel expenses would be covered by the tax increases. Those additional personnel expenses in 2018, she said, include the newly created position for a deputy chief of police.

The city received $942.04 from the hypothetical owner of a $400,000 home during 2017, according to figures used by Polizzotto.

According to the Snohomish County Auditor’s Office, the average Mill Creek home’s assessed value increased 12.7 percent from 2017 to 2018, which raised the taxable value of the home from $400,000 to $450,800.

Based on the figures from Polizzotto’s presentation, a homeowner whose house is assessed for $450,800 will pay the city of Mill Creek $955.31, which is $13.28 more than was paid for a $400,000 house in 2017.

Polizzotto emphasized that only 22 percent of a homeowner’s tax bill went to the city in 2017. The Everett School District, Washington State, Snohomish County, Sound Transit, and the Sno-Isle Library also take their share of the monies collected by the county assessor.

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