(The Center Square) – The Spokane Valley City Council moved a step closer to creating a local transportation benefit district, a mechanism to facilitate new taxes, after approving the first reading of a draft ordinance Tuesday evening.
Some on the council doubted whether residents could shoulder a heavier tax burden.
Adoption of the ordinance requires a second reading, scheduled for the council’s Oct. 24 meeting.
As proposed, Spokane Valley’s city limits would be designated as the benefit district’s boundaries and the city council would serve as governing board.
State law allows cities and counties to form TBDs to raise revenue, usually through local sales tax increases or added vehicle license fees, specifically dedicated to local projects. Those can include 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.
No funding mechanism was specified in the draft ordinance but various options and revenue estimates were discussed at length Tuesday by city staff and council members.
“It’s pointless to establish it if we’re not going to fund it in the future,” said Laura Padden, the lone council member to vote against advancing the proposal for a second reading.
Padden said a TBD would add another burden on taxpayers at a time when inflation is high and other government entities are also seeking money. She referred to Spokane County’s Measure 1 proposal on the Nov. 7 election ballot that seeks a sales tax hike for criminal justice funding and local schools running property tax levies and bond measures.
“We need to consider all that,” said Padden.
Echoing Padden’s concerns, fellow council member Brandi Peetz said she’s heard from residents on fixed incomes “who can’t even afford (to spare) a couple dollars.” Peetz said the city has found different ways to “maximize our dollars … (and) take really good care of our roads.”
Ultimately, though, Peetz voted with the council majority to advance the draft to a second reading. Also voting in support were mayor Pam Haley and council members Tim Hattenburg, Rod Higgins, Ben Wick, and Arne Woodard.
Woodard said city officials have discussed street maintenance funding and the possibility of a TBD on multiple occasions and only received one comment from a resident at Tuesday’s public hearing. But Woodard said he has personally heard “from some very conservative people” who would support a funding proposal if they knew the revenue was going to a dedicated street fund.
Hattenburg concurred, saying, “People tell me they’re willing to pay a small amount … to fix the roads.” He said residents don’t want to see local roadways fall into disrepair like neighboring Spokane city streets, which are notorious for their potholes.
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 is falling short of that amount by at least $5 million for local streets, according to a council summary.
Without a dedicated fund, the city has been tapping its reserves, said deputy city manager Erik Lamb, who noted the council has previously identified transportation as one of the city’s top-two priorities.
Implementing surface treatments on local streets was also a priority among 1,018 respondents to a 2021 community survey, said city engineering manager Adam Jackson. He said it is preferable to maintain “a better road” – and he placed most of Spokane Valley’s in that category – than to pay costly repairs on “a poorer road.”
Of the 114 municipal TBDs in Washington, Lamb said 66 are funded by sales tax revenue, 56 are funded by vehicle license fees, and 13 are funded by both.
State law allows a local sales tax increase up to 0.3% – that is, 3 cents on every $10 purchase. A council can authorize an increase of 0.1% but any higher amount is subject to voter approval and must be renewed every 10 years. With the other option, a council may impose a basic $20 annual vehicle license fee, but voter approval is typically needed for higher amounts up to $100.
Annual revenue estimates varied between $2.78 million to $6.96 million using tab fees of $20 to $50, which would only be levied on vehicle owners within city limits, said Lamb.
Under the sales tax option, estimated TBD revenue ranges from $3.8 million to $11.4 million, depending on the percentage increase. And that cost would be shared by non-residents coming to Spokane Valley to shop. Lamb said 48% of the city’s retail sales tax revenue is attributed to out-of-town visitors.
The prospect of non-residents sharing the tax burden pleased Woodard, saying, “I’ll take that action any day of the week.”
If the TBD is established, Woodard and Hattenburg agreed with Wick on seeking a public vote on any future tax or fee increase proposal.