Downtown Everett, looking east-southeast. (Chuck Taylor / The Herald)

Downtown Everett, looking east-southeast. (Chuck Taylor / The Herald)

5 key takeaways from hearing on Everett property tax increase

Next week, City Council members will narrow down the levy rates they may put to voters on the August ballot.

EVERETT — Next week will be “a decision point” as council members fine-tune a property tax levy lid lift that will go before voters in August, Government Affairs Director Jennifer Gregerson said at Wednesday’s City Council meeting.

Officials are seeking to address the city’s projected $12.6 million budget deficit in 2025 through a property tax increase — which Mayor Cassie Franklin has said could ultimately lead to massive changes for the city’s fire department and libraries.

On May 1, the council will vote on the final version that will appear on the ballot.

Last week, Franklin recommended officials choose a levy amount that would cost the average homeowner an additional $25 to $30 a month, on the higher end of rates under consideration.

That range “gives us the time needed to stabilize these services for at least a few years,” she said, adding she sees the lid lift as “a major step forward in us really having security in those essential services.”

At the meeting Wednesday, city Finance Director Susy Haugen addressed questions about the tax increase as staff and officials continue to work on the measure.

Here are some key takeaways from Wednesday’s meeting.

1. Property tax vs. sales tax

Why can’t Everett raise its sales tax rather than its property tax?

Last year was “a record year” for sales tax revenue, largely because of construction, Haugen said at the meeting. But dips in the economy can have a “rapid and deep” impact on sales taxes, she noted.

The value of the construction permits Everett issued in 2023 dropped from the previous two years, meaning construction sales tax seems poised to decline this year and next, she said.

Property taxes, on the other hand, are much more stable.

“First and foremost, the city needs stable funding to serve this community,” Haugen said. “That stability is particularly important during difficult times, because that is when we see large increases in the need for public services.”

Sales taxes also hit low-income households harder than others, she noted, since those households have to spend a greater share of their total income on necessities.

2. A lump sum levy lid lift

City staff recommend raising the levy all at once, instead of increasing property taxes by a smaller amount each year.

“We have a very large hole to fill,” Haugen said. “So the need is immediate to sustain service levels.”

Everett’s projected $12.6 million deficit next year will grow to $35.4 million in 2030, if nothing changes, according to city forecasts.

A one-time levy lid lift also gives taxpayers more clarity, Haugen said. After the lift, levy increases would again be capped at 1%, per state law.

3. Where’s the money going?

The extra funds from the levy lid lift “would go to the city of Everett to support quality of life and basic government services like police, fire, streets, parks, the libraries and cultural arts and events,” Haugen said. It would also go toward jail fees and the municipal court.

The proposed increase is unrelated to other taxing districts, like schools, county services or the port, she stressed. Nor would the levy support a proposed new AquaSox stadium, Everett Transit, the city’s water and sewer utility service or its golf courses.

4. For one Everett resident, the lift is a ‘progressive option’

A handful of residents spoke at a public hearing for the lid lift Wednesday.

One Port Gardner resident spoke in favor of the lift.

“It just defies financial gravity to expect the city to continue to fund itself with revenues that fail to keep pace with costs,” he said.

He noted the city could look into options to deal with rising insurance costs. Everett’s property insurance payments have grown 118% since 2014, from $2.84 million to $6.2 million, according to city data.

However, the commenter said, savings on insurance wouldn’t fix the core issue of revenues falling behind inflation.

Asking property owners to pay more is “not a very easy decision,” he said, but it’s “the most progressive option available and it impacts those under financial duress the least.”

5. For others, ‘a spending problem’

Former City Council member Scott Murphy took a different view.

“The problem is we have a spending problem,” he told the council.

Some of the funding increases for city departments are “shocking,” he said.

The lid lift is “putting the cart before the horse,” Murphy said, adding the city needs to look at what can be done to cut costs.

Murphy also noted recent increases in full-time positions.

The city added about 67 positions between 2014 and 2024, according to city data, and eliminated about 41. Of the new positions, 28 are subsidized by grants or donations, Haugen said at the meeting.

The number of full-time staffers per 1,000 residents declined in the past decade, she said, from 7.1 to 6.5.

“I totally get” concerns about staffing, Franklin said after the public comments. The reason for the state-mandated 1% cap “is to ensure lean government.”

“Our staffing has changed and grown to meet the community’s needs,” she said. “But we’re still doing all the services of a full-service city, with fewer staff per thousand residents than we had a decade ago.”

Sophia Gates: 425-339-3035; sophia.gates@heraldnet.com; Twitter: @SophiaSGates.

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