Property tax debate looms

The city of Mill Creek is planning to propose a property tax hike for next year, and Mayor Terry Ryan is urging the City Council to reject it.

The increase, recommended by finance director Joanne Gregory, would be the standard 1 percent allowed by state law. If approved by the City Council, it would also be the first property tax increase in two years.

Residents can comment on the proposed increase at the Tuesday, Nov. 22, City Council meeting. The meeting is the first of two public hearings by the City Council on the proposed tax increase and mid-term budget adjustments (see separate story.)

In November, 2004, the City Council voted 6-1 to forego a 1 percent property tax increase for this year, in part because voters had decided in September 2004 to tax themselves to continue funding the Mill Creek Library. The decision forced the Council to cut some items out of the two-year budget prepared by city staff.

Ryan asked the Council on Tuesday, Nov. 15, to consider foregoing another property tax increase this year, also because of the library-tax levy.

A 1 percent property tax increase brings in approximately $37,000 to city coffers in one year. Because of voter-approved initiatives, cities have to limit property tax increases to 1 percent per year. Larger increases are possible only if there is a previously unused annual increase or if approved by voters.

Even with a 1 percent increase, the overall tax rate would likely drop due to of rising property values. The formula used to calculate the property tax rate indicates that the rate would drop 20 cents per $1,000 of assessed value from 2005 to 2006.

Because the city operates on a two-year budget cycle, this year the city is only adjusting its budget to account for higher fuel costs and other “housekeeping measures,” Gregory said. There are no plans to add employees to the city, she said.

Those changes relate to funding a variety of city projects that are funded by real estate excise tax revenue. The city used many of those revenues when it purchased the Huntron Building in June.

In addition, Council members will likely be asked to appropriate money for the city to hire a private firm to conduct a census of the 553-acre annexation that may become finalized on Dec. 1.

As far as further adjustments on the budget resulting from the annexation, Gregory said those would likely be brought before the City Council in early January 2006.