Monday, November 10, 2008

Property Taxes: Bellingham's Dilemma

Today's Herald trumpets the popular theme of no new taxes, and who can argue with that as a good goal?
It is a good goal and one to be sought, but not something that necessarily fits the times and the needs of citizens.

But, sometimes practicality, pragmatism and courage dictate that certain goals are not really as important as other goals, like continuing to provide those essential services to citizens that only local governments can provide.

I believe we are in such a situation now, with an up to $5 million budget gap looming for 2009, and no real expectations for relief other than what we can enact within reason.
This problem did not happen all at one time, masked as it was with the glittering proceeds from speculative growth.

No, it has been creeping up on us for several years, as is normal for such things in communities like ours which value good essential services, plus a measure of cultural services as well.
Bellingham has not achieved so many 'top 10' lists without consistently doing many things right, not just 2 or 3!
And, if we wish to sustain our good record into the foreseeable future, it behooves us to buckle down and continue doing the 'right things' whether they are easy or popular, or not.

So it is that we come back to the subject of property taxes, which are widely considered to be the most progressive form of taxation we have locally.
Here's my 2 cents worth; we need to pass the 1% property tax that is available to us this, and probably every year!
Why, you may ask?
Because it is one of the few tools available to us locally to incrementally and fairly raise revenues for essential services, that's why.

At a 1% level, the estimated $170,000 or so that would represent new income is not even sufficient to cover inflation, or COLA raises for employees - 85% of whom are members of bargaining units which have negotiated annual wage & benefit increases.
And, that $170k that would come to the City, represents only about 25% of the actual additional property taxes raised; over half of which goes to schools and higher education purposes, 14% to Whatcom County and a small % to the Port -all set by law.

The point is, not only the City would benefit, but also other jurisdictions which are also in need of additional funds.
The net impact of a 1% property tax increase is about $3 per year for the owner of a $300K home.
Folks, that peanuts!

More important, the normally anticipated additional property taxes due to new construction, growth and re-evaluations will more than likely be substantially reduced because of the general economic conditions which now prevail.
Under such circumstances, I think it would be irresponsible to not use one of the few revenue raising tools at our disposal.

I hope the City Council will seriously consider its limited options and vote to raise the property tax this year by the full 1% allowable.
Hopefully, the Council will also do this by at least a 5-2 votes, which would require the Mayor to comply without a chance of veto!

At least, that is my considered opinion, which I myself followed for 8 of the 9 years I served on the Council.
The one year I voted against a 1% property tax increase, I came to quickly regret, because these kinds of actions do have a cumulative, adverse effect that simply grows over time.

But, should the Council not be able to muster 5 votes for increasing the property tax, at least make sure that amount is 'banked' for possible future use!

I could make this argument and its context much broader, but I'll save that for another time.
This particular decision must be made soon, and I hope the Council finds the wisdom and courage to make the right one!

Property taxes are certainly not the panacea for what ails our City budget.
But, it is a piece of the puzzle, and it must be used as it can.