By Jana Hill
For The Herald
MILL CREEK — City officials were set to raise property taxes as high as 6 percent — the most allowed by state law — but passage of Initiative 747 stopped them before they got the chance.
"We haven’t ever taxed the full 6 percent cap that cities have been allowed to do, because we’ve kept the line on our expenses," said Joanne Gregory, city finance director.
I-747 now limits property tax increases to 1 percent unless voters approve additional increases.
For 2002, the council approved an increase of almost 2 percent that would show up on city tax bills, for example, as an increase to $1,035 in 2002 for a $300,000 home. That’s up from $1,017 in 2001.
The council wanted to raise taxes because of the loss of state funding and rising costs of personnel and park and street maintenance, Gregory said.
Now that I-747 has passed, "it is projected that over maybe six years we could lose $1 million in revenue based on what we wanted to levy," she said.
Mill Creek has kept taxes low, but Mayor Terry Ryan said with I-747 passing, Mill Creek will bear the brunt of the tax limitations just like other municipalities.
Elections to authorize more than the 1 percent limit will cost cities money.
Scott Konopasek, elections manager for the Snohomish County Auditor’s Office, said Mill Creek would pay approximately $1 per voter for a primary election, and $8 per voter for special elections.
The amount for special elections could be decreased if other cities participate, Konopasek said.
Mill Creek appears to have done a good job of budgeting in the past.
Guidelines from the Government Finance Officers Association advise that 5 percent of the annual budget, or one month’s expenditures, should be put away in city reserves.
Mill Creek, with a $5.3 million budget, has a 49 percent reserve fund in the 2001-02 budget, which is "very high for cities," Gregory said. That fund, she said, is like a savings account.
A council-approved policy requires that the city keep 10 percent in its reserve fund.
Gregory credited the healthy condition of the city’s budget to one-time development revenue, good economic times and good budget management.
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