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Spokane Valley council divided on advancing TBD funding measure

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(The Center Square) – A divided Spokane Valley City Council on Tuesday advanced a draft ordinance proposing an annual $20 vehicle licensing fee that, if ultimately enacted, would provide more revenue for street maintenance while reducing subsidy transfers from the city’s general fund.

Mayor Pam Haley, deputy mayor Rod Higgins, and councilmen Tim Hattenburg and Arne Woodard voted to schedule a second reading of the tab-fee ordinance at the council’s Dec. 12 meeting, at which time the measure could be adopted and go into effect next year.

Council members Ben Wick, Laura Padden, and Brandi Peetz dissented.

That vote followed a lengthy, ongoing discussion among council members and staff on different options in funding a new transportation benefit district that was established in October.

As proposed, the ordinance would take effect on July 1, 2024 and add a $20 fee to residents’ yearly vehicle licenses. Initial revenues estimated at nearly $2.8 million would be collected by the state Department of Licensing and returned to the city. TBD monies are specifically dedicated to local improvement projects including street paving, crack sealing, pothole repairs, snow plowing, cleaning storm drains, and more. Revenues can accrue over time for larger projects or provide matching dollars for future grant funding.

There is consensus among a majority of council members that the city should have a dedicated revenue source, in part to reduce reliance on general fund transfers that could be used for other purposes such as hiring additional police officers. Since 2107, the city has diverted over $16 million from the general fund to the street fund, and a transfer of over $4.5 million is budgeted in 2024.

But in discussions since the transportation benefit district was established, council members have voiced divergent opinions on its funding mechanism.

A majority of cities and towns in Washington with TBDs rely on a local sales tax hike: state law allows increases of 0.1% to 0.3% with renewal required every 10 years. A sales tax increase would affect anyone making a purchase within the city, including non-residents. Vehicle tab fees have been less utilized by other communities. Fees typically range from $20 to $50 and only affect residents or businesses with vehicles registered within city limits.

By law, city councils can impose the minimum amount of either type without a public vote, although that remains option. Higher amounts initially require voter approval.

Council members’ discussions Tuesday centered on those different options. Haley, Peetz, Wick and Woodard have voiced support for the sales tax because, said Wick, 48% of the revenue collected by the city comes from non-residents, thereby reducing the fiscal burden on locals. Padden, who opposed formation of the TBD, also felt that a sales tax was more equitable than a tab fee, calling it a fixed cost that adversely affects lower-income persons.

Both Wick and Peetz asked for a public vote on establishing any TBD fees.

Woodard, Hattenburg, and Higgins agreed on the need to move forward now. “Are we going to address this problem?” asked Higgins. “I think it’s time to be leaders,” said Woodard. “We make the hard decisions. If not … we might as well cancel the TBD and let the roads go to gravel.”

“People say ‘No more taxes,’ but they want more police officers,” Haley observed. “We want more police officers. This (fee) is replacing (general fund) money that could go toward that.”

In recent years, said city manager John Hohman, Spokane Valley has enjoyed increased sales tax revenue which partially offset street fund subsidies from the general fund, but that revenue “is flattening out.”

“We’re at a point where staff needs direction,” Hohman told the council. “Increase fees or reduce services?”

Deputy city manager Erik Lamb and city engineering manager Adam Jackson noted that transportation issues and local street improvements have been identified by citizens as being among the city’s top priorities.

Spokane Valley has over 320 miles of local access streets and nearly 130 miles of larger arterial and collector roadways. An estimated $16 million is needed annually to maintain “suitable pavement condition,” but the city’s street fund is falling short of that amount by at least $5 million, thereby requiring general fund transfers.

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