(The Center Square) – Spokane Valley leaders explored a menu of tax and fee increases on Tuesday as the city council grapples with growing concerns around its pubic safety contracts with Spokane County.
Voters approved a sales tax hike last year to hire additional police officers, but the Spokane Valley City Council generally avoids raising the cost of living. While the officials haven’t yet decided whether to increase taxes or fees to balance next year’s spending, several revenue options remain on the table.
The seven-hour meeting repeatedly highlighted instability in public safety costs tied to a contract with the Spokane County Sheriff’s Office for policing services, with no estimates available yet for next year.
The Valley has several other contracts with Spokane County for court services and more, but concerns are growing among city leadership over the county’s annual settle-and-adjust bills falling years behind.
“We do not have what I would say [is] a reliable budget estimate from Spokane County,” City Manager John Hohman told the council on Tuesday, referencing the policing contract.
“They provided estimates for 2025 and 2026 on the law enforcement contract; these are long overdue, yet… in discussion with Sheriff [John] Nowels yesterday, he believes that number is about $2 million shy of where it should be.”
Agenda materials show the sheriff’s contract amounting to $38.5 million in the 2026 amended budget.
Estimates from the county put the figure at about $32 million for 2026, but Hohman said the city has to budget conservatively if the council doesn’t receive these estimates in advance to avoid larger bills.
The contract has grown by roughly 70% over the last five years, according to the city’s 2026 amended budget, from $22.6 million to $38.5 million, or about 40% based on the county’s $32 million estimate.
“We’re not saying that we’re wanting you to [increase taxes and fees] or projecting that we need them at this point,” Finance Director Chelsie Walls told the council. “They are just in here for informational purposes.”
Options available
Walls said the first option available is the 1% annual property tax increase allowed by state law, which the council has historically rejected, resulting in some banked capacity.
If the council approved the 1% increase for 2027, it would generate another $143,000 and raise taxes on a $413,000 home by $3.25.
After years of rejecting the 1% property tax hike, city officials could exercise that banked capacity to generate another $1.38 million in revenue, raising taxes on a $413,000 property by $31.26 annually.
She also laid out property tax increases that would require voter approval to generate an additional $1 million to $14.82 million, based on rates ranging from 84 cents to $1.60 per $1,000 of assessed value.
Other options included increasing the utility tax by 1% to 6% to generate an additional $1.4 million to $8.4 million in revenue, raising sales taxes and hiking business license fees from $25 to $95 by 2028.
“I would like to introduce the idea of giving some money back to residents,” Councilmember Al Merkel said, proposing $4 million in relief through various cuts, which not all of his peers were on board with.
“If Spokane Valley can afford a larger communications department, nearly a million dollars in new IT spending, and hundreds of thousands of dollars in subsidies and administrative growth, then we can afford to give some of that money back to the taxpayers,” he wrote a press release late Tuesday night.
The council has balanced minor general fund deficits over the last few years during the budget-making process, with healthy reserves sitting idle, but it’s unclear whether that will continue in 2027.
Public safety costs are driving much of that uncertainty, so the council has gone back and forth on the idea of ending the sheriff’s contract and standing up a city police force. The dais wants to explore the idea moving forward, but will likely renew the sheriff’s contract with more guardrails in the meantime.
The council agreed to fund a public safety director to review the city’s contracts with the county.
“I don’t see us being compatible with [the county], which makes me kind of feel like in the next five to 10 years a divorce is coming,” Councilmember Jessica Yaeger said Tuesday about the sheriff’s contract.
Establishing an independent police force for the city would take time and require additional resources.
Jeff McMorris, senior director of finance and administration at the county, told The Center Square that his team is catching up but said separating the city and county’s law enforcement costs takes time. He said the county has new accounting software and is working to provide Valley leaders with access to it.
The city and county share several sheriff’s deputies, who move between the Valley and the county’s unincorporated areas, so McMorris has to allocate those costs based on their respective jurisdictions.
He confirmed that the county has not provided the Valley with a cost estimate for next year’s sheriff’s contract and acknowledged that the city council has discussed establishing its own police department.
However, McMorris said parting ways with the sheriff’s office would result in additional costs anyway.
“The Valley is frugal with every penny,” McMorris said, as the county faces a $30 million deficit of its own.
