Everett council raises taxes, fees to balance budget

EVERETT — Residents of Everett will pay higher utility taxes starting Jan. 1.

That increase is among measures the City Council enacted Wednesday night to help erase a $13 million deficit in 2015.

The utility tax hikes and other revenue measures approved Wednesday will be paired with cuts to city services, which Mayor Ray Stephanson can make without council authority.

The city expects that the tax and fee increases will raise revenue by about $6.5 million. Cuts will reduce the deficit by about another $3 million.

Another $3.7 million in unspent money from 2013 will bring the 2015 budget into balance.

The proposals have met with some resistance among council members and the public. Among others raising objections were Judy Tuohy, director of the Schack Art Center, who is hoping to unseat Councilman Rich Anderson in November’s election.

With Everett’s low average income compared with other Snohomish County cities, Tuohy said, the tax increases would be felt acutely, especially among the city’s poorest residents.

Councilwoman Brenda Stonecipher, who has questioned the openness of the budget- balancing process, said the city should cut spending more before raising taxes.

“A utility tax is about the most regressive tax you could choose,” Stonecipher said. “It impacts poor people more than it impacts people on this dais.”

Council President Jeff Moore agreed with her in principle but asked Stonecipher for examples of less-regressive taxes the council could act on.

“I’d love to have non-regressive taxes, but I don’t know how to get there,” Moore said.

The utility tax measure passed on a 4-3 vote, with Stonecipher and Councilmen Ron Gipson and Paul Roberts voting against it.

Stonecipher was the lone vote against raising business license fees, saying it would be too great a burden for small businesses.

Other tax and fee-raising measures passed the council unanimously, although some of them will not go into effect until next year.

The largest source of new revenue for the city is going to come from higher taxes on electricity, telephone service and natural gas, with rates rising to 6 percent from 4.5 percent. That is expected to bring in $3.2 million in 2015.

New taxes for cable and garbage service — starting at 2 percent in 2015 and increasing to 4 percent in 2016 and 6 percent in 2017 — will bring in another $877,000.

The new rates for all utilities will go into effect Jan. 1.

Other measures enacted Wednesday night include:

*Creation of a taxing district to impose a $20 car license fee, which will bring in $1.5 million.

*Raising business license fees to $75 from $10 and adding annual renewal fees of up to $75 ($465,000).

*Increasing traffic mitigation fees for development to $2,400 from $900 ($333,000) — effective Jan. 1.

*Requiring parking tickets be paid before vehicles are released from impound ($50,000).

*And raising land use permitting and review fees ($45,000) — effective Jan. 1.

On the expense side, Stephanson’s administration is proposing to cut 15 employee positions, eliminate the Library Outreach Program (including the Bookmobile) and eliminate lifeguards at Silver Lake Beach. Those and other measures will save about $3 million.

Stephanson also announced at the start of the meeting that he has decided not to extend the date by which the city would completely fund pensions for retired firefighters and police officers.

Everett will continue to wrestle with revenue shortages in coming years, with future fiscal year deficits reaching $21 million by 2018. The city plans to looks for savings in several departments, starting with the Fire Department. Changes to pay or benefits, though, would require negotiating with labor unions. And it is unclear what savings might ultimately result.

Chris Winters: 425-374-4165; cwinters@heraldnet.com.