The slowing economy means this city will take a more conservative approach with its proposed biennial budget than it has in several years.
No layoffs are planned in 2009-10 but some non-essential programs face cuts next year. And, though property and sales tax incomes have declined recently, taxpayers can expect to see the share of taxes they pay to the city actually decrease slightly next year.
Some vacant staff positions just won’t be filled but no employee will lose a job, officials say. A few community grant programs will not receive funding next year.
“We as a council are in consensus that we are going to put a temporary hold on the grant program for 2009,” said Councilman John Zambrano.
Council members have already agreed not to provide $25,000 for the 2009 annual Fourth of July Celebration, to cut the $6,000 subsidy for the Garden Club and another $6,000 to promote concerts in the parks as well as holding off on grant support for the annual Tour de Terrace, a privately organized summer festival the city has sometimes partially subsidized.
Saved from the grant cut list: $7,500 for seniors and $2,000 for the annual tree-lighting ceremony.
“We don’t have the same (tax) base as other cities, so we have to be a little more frugal, a little more accountable to the public on how we spend our funds,” Zambrano said.
The city’s total budget is $50 million in 2009 and $45 million in 2010, a slight decrease from the 2007-2008 budget.
Mayor Jerry Smith, who organizes the summer Tour de Terrace festival, said there won’t be a 2009 Fourth of July event. Fireworks will still be set off during Tour de Terrace.
“That saves us $25,000 plus all the overtime for city employees that have to work,” he said.
City officials propose increasing the property tax levy by the maximum 1 percent – or $37,772 — and council members say they’re likely to agree to add to that the city’s $58,000 in “banked capacity,” money left over from past levy increases the council opted not to seek.
If the council includes banked capacity, the city will seek a $3.9 million tax levy, an amount that includes the 2008 levy plus the 1 percent increase, banked capacity and property taxes from new construction, said finance director Sonja Springer.
The Snohomish County Assessor’s Office then sets the tax rate based on the total assessed value of the city’s property.
Tax rates generally decline as property values increase and increase as property values decline. Springer said if the tax rate is based only on the 1 percent increase, it will be $1.64 per $1,000 assessed value. If it includes the banked capacity, the rate will be $1.66 per $1,000.
Here’s the part that may seem a bit unusual: The tax rate will go up for the average property owner but the amount of tax that person pays the city will go down.
In 2008, the owner of a $300,000 house paid $505 in property taxes. In 2009, the same property owner will pay $499 – a $6 decrease, even if banked capacity is figured in.
Why the decrease? Payments on a voter-approved 20-year bond for the police station have ended, Springer said.
“The reason that the council is moving forward with considering using the banked capacity is that the impact on the average $300,000 home is going to be lower than last year,” said city manager John Caulfield, adding that the city is guarding against reacting to recent economic news in a “Chicken Little” way by cutting staff and services.
“I don’t want to take the sky’s falling approach,” he said. “I’d rather wait until we have more empirical knowledge about where things are going not only nationally but in Mountlake Terrace.”
One area the city’s watching closely is income from gambling taxes, which accounts for 10 percent of the city’s general fund. That’s the fund that pays for essentials such as police and regular street maintenance.
Caulfield said despite the conservative nature of the budget, residents can expect pretty much the same level of service in 2009 they saw in 2008.
“Whether or not the economy’s doing well, we don’t fluctuate,” he said. “When things are going badly, we don’t drop as far; likewise, when things are going well, we don’t go up as far.”