(The Center Square) – The Spokane City Council filled a $13 million deficit on Monday after approving a new 12% parking tax and a “temporary” 0.5% utility tax and rate increase, along with several cuts.
The council spent months preparing for this after Mayor Lisa Brown and City Administrator Alex Scott told the officials in September that cuts alone wouldn’t close the anticipated shortfall. Last winter, they closed a $25 million gap, despite concerns over implementation from two conservatives on the dais.
Councilmember Zack Zappone said, “We’re taking the administration by their word,” at the time. Now, residents are facing an even higher cost of living to maintain the status quo. The business community says the tax hikes will only make it harder to attract people to downtown, driving future budget gaps.
Councilmembers Jonathan Bingle and Michael Cathcart, who represent the conservative minority, both voted against the budget and tax increases on Monday. Like last year, they warned that piling onto the cost of living while increasing unsustainable spending will likely leave Spokane facing another deficit.
“I do worry that one year from now, not only will we be in a major deficit, but we will be in that major deficit with a reduced bond rating,” Cathcart said before Monday’s vote. “We will definitely be wishing that we had made some different decisions, both at the mid and the previous start of the biennium.”
The council passed the 12% parking tax with less than a month’s notice. The community sent dozens of letters vehemently opposing the tax in the days leading up to Monday. While the officials expected it to raise about $2 million annually, they deferred implementation to April, so it’ll generate less in 2026.
The “temporary” 0.5% utility tax and rate increase comes on the heels of another from former Mayor Nadine Woodward that the council made permanent last year. After this most recent hike, the rate sits at 21.5% and is expected to generate $1.5 million next year, leaving concerns about the gap in 2027.
The officials amended the mayor’s budget proposal from earlier this month, increasing library funding by $500,000 to avoid service-level cuts and limiting staff reductions in the council office. However, in doing so, they only partially funded the office while moving $149,000 to reserves. They eyed cuts to council staff earlier this budget cycle, but delayed them in hopes of carving out sustainable funding.
The budget amendment also allocated another $100,000 to the public defender’s office and restored almost $90,000 in funding to the city’s public access channel to prevent layoffs there. Communications Director Erin Hut told The Center Square that the budget cuts a total of 15 full-time positions citywide.
Brown warned city staff in an email last month that the deficit could’ve resulted in 30 to 50 job cuts.
The mayor’s budget proposal also reallocated funds across accounts to reduce reliance on the general fund and one-time transfers. Brown attributed the deficit on Monday to the national economy, inflation and lower consumer confidence, despite the city facing shortfalls for several years in a row.
“This is a people-driven industry that we are in, and wages are a big part of compensation,” Council President Betsy Wilkerson, noting unsustainable labor agreements. “We’re still coming up on contract negotiations again, so we have another storm on the horizon that we’ll have to deal with this council.”
The council majority expressed support for the end result, but acknowledged the fiscal cliff they will need to address over the next year. Some officials echoed Cathcart’s concerns about the general fund forecast from July, which said that, without significant adjustments, they could face a $50 million gap by 2031.
Councilmember Paul Dillon agreed with Cathcart that the city will likely face structural deficits for the foreseeable future and said they must eliminate new spending to address this moving forward. Bingle said the budget and associated tax hikes come on the heels of the largest tax increase in state history.
He issued a statement before Monday’s meeting, noting that raising taxes has become the city’s default response to addressing overspending. He said residents deserve a local government that can live within its own means, just as every citizen must do while also accounting for the city’s rising cost of living.
“Raising taxes when reasonable alternatives exist is lazy at best and, at worst, fiscally immoral. We should focus solely on funding essential government functions, such as public safety, roads, and utility infrastructure,” Bingle wrote in a statement on Monday. “At the very least, we should keep our budget flat for the next few years, avoiding the creation of new departments and the hiring of redundant staff.”
