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HomeMy WebLinkAboutCity Council Meeting - Council - Minutes - 11/29/1982 Kent, Washington November 29, 1982 A special meeting of the Kent City Council was called to order by Mayor Pro Tem. Billie Johnson at 7: 00 p.m. Present: Councilmembers Bailey, Kelleher, Leahy, B. Johnson, J. Johnson and Woods, City Administrator Cushing, City Attorney DiJulio, Finance Director McCarthy, Administrative Assistant Webby. Also present: URS repre- sentative Ramsey. Mayor Hogan, Councilmember Biteman, Public Works Director Wickstrom and Planning Director Harris were absent. It was determined that proper legal notice for the special meeting had been given and that the purpose of the meeting was to consider amending Ordinance 2368 , relating to sales tax. Cushing noted that if the City enacts an increase in the sales tax by the end of November, ten months of receipts would be guaranteed for 1983, as opposed to only eight rionths of receipts if the increase is not enacted until December. He referred to a proposal discussed by the Finance Committee consisting of an increase of . 3% effective January 1, 1983 and an additional . 2o effective 7/1/83 , along with a reduction of the City' s utilities tax from 3. 5% to 2 . 5%. The net revenue from this would amount to $771 , 000 which could be used to add some items to the budget and the balance could be used for a capital reserve fund. He noted that it was suggested that a size- able portion, at least half, of the revenue be allocated for the capital improvement fund and not used for ongoing operations. Cushing pointed out that the above had been suggested by Bailey, and noted further that action on reducing_ the utilities tax would not take place at this special meeting . The City Attorney has pre- pared an ordinance for the consideration of the Council. Leahy noted that a part of the Finance Committee' s recommendation was to reinstate $80, 000 to the Worksmans Compensation and Unemployment Insurance funds. Bailey noted that Administration had proposed to move this amount from these funds to assist in balancing the budget and that he was not in favor of this proposal. He noted that when governmental entities borrowed funds to balance a budget, the funds were seldom replaced. He noted receipt tonight of a letter from the Chamber of Commerce, endorsing the increase of . 3% and the 1% decrease in the utilities tax but opposing the further increase of . 2% of the sales tax in July. The Chamber suggested that this be deferred for further evaluation. The letter also noted that support of the increased sales tax was based upon an assurance that the capital projects fund would be established. Bailey noted that in the next five years, the City would have con- siderable capital outlay projects . He noted that this was a fair and equitable proposal under which everyone in the community would - 1 - November 29 , 1982 be supporting the capital improvements, not just the property owners. Leahy supported Bailey, notinq that this was a responsible way to meet obligations and at the same time try to mitigate the effect on the taxpayers. He pointed out that even with the tax increase, some services would have to be cut. He noted that dis- cussions on restoring the cuts to the budget represented restoring only half of the cuts and that even with the increased sales tax, the budget would still be 2% below the current level. Bailey commented that the cities can' t wait to see what the legislature will do. Upon questions from B. Johnson, Cushing noted that if part of the funds generated by the sales tax was earmarked for the Con- tingency fund as well as for capital projects, this would protect the city from swings in the economy and would give the city operating capital to carry through low periods in the revenue cycle. Leahy noted that the subject toniqht was the sales tax and that the use of the anticipated funds would be addressed through the budget process. Woods questioned the additional . 2% noting that this part of the package could be delayed until action by the legislature was determined. Bailey noted that the ordinance could be amended before July, rescinding the . 2% or cutting it back to . 1%. He noted that adopting it now allowed time for financial planning and pointed out that the sales tax revenue on food would end in July. B. Johnson concurred with Bailey. DiJulio introduced Ordinance 2377 providing for a . 3% sales tax effective January 1, 1983 and providing further for an additional . 2% , making a total of . 5% effective July 1, 1983 . BAILEY MOVED to adopt Ordinance 2377 and Leahy seconded. Kelleher disagreed, opining that the level of service could be maintained with a smaller increase in sales tax (a total of . 3%) and a larger decrease in the utilities tax (1. 5%) . He stated that this would generate $316, 000 which would be available for restoration or supplemental budget increases. He noted that after the first year , we could contribute $143 , 000 per year into a capital fund. Kelleher stated that he saw the Chamber of Commerce proposal as a compromise between his proposal and Bailey's proposal and that he would support the Chamber proposal, inasmuch as the Council did not appear to agree with his proposal. Bailey commented that the Council must look to the future and noted that the money generated by the sales tax increase was not meant to restore all the cuts which have been made to the budget. B. Johnson noted there were capital projects throughout the city which have yet to be completed, pointing out that reduction of the utilities tax would benefit the residents of the city and increasing the sales tax wouldgain revenue not only from the residents but from those who come into the city to do business . J. Johnson noted 2 - I November 29, 1982 that all were in agreement that a capital projects fund was needed and urged that the additional . 2% to be levied in July be deferred until after the first quarter of the year until action of the legis- lature is determined. Bailey opined that the legislature would not be doing much to help the cities and B. Johnson agreed with him that the additional . 2% could be repealed at any time. KELLEHER MOVED TO AMEND the motion adopting Ordinance 2377 , to defer action on the additional . 2% , Woods seconded. Kelleher noted that it was not imperative that the additional . 2% be enacted now, and that he agreed with J. Johnson that there were possibilities which could occur making it wise to delay. These possiblities in- cluded: The County might not implement the tax, the tax on food might not be repealed, the legislature could make up-front develop- ment fees legal again, all of which would increase Kent' s revenue. Leahy again expressed agreement with Bailey ' s statements. Woods noted that it was easier to institute the additional . 2% than it is to take it off and was in favor of delaying action on the addi- tional . 2% until March or April. Kelleher' s proposed amendment resulted in a tie vote , with Kelleher, Woods and J. Johnson voting in favor and B. Johnson, Bailey and Leahy voting against. The amendment FAILED. Kelleher proposed another amendment: to defer action on the additional . 2o until the next regular meeting of the City Council in which all members are present. DiJulio noted that the Council could not act to bind the actions of a future Council meeting. Kelleher expressed his concern because there was a deadline on enacting the ordinance relating to the sales tax and he did not want to vote against the revenue package, but was opposed to enacting the additional . 2% at this time. Leahy opined that it was easy to amend the ordinance later regarding the . 2% portion. DiJulio confirmed that this was correct. Bailey 's motion to adopt Ordinance 2377 CARRIED with J. Johnson voting nay. Bailey suggested further action regarding reducing the utilities tax, establishina guidelines for expenditures from the capital projects fund and restoring the $80, 000 to the two trust funds. DiJulio noted that this was a special meeting and the legal notice delcared the purpose of the meeting to be related to sales tax only, so other action was inappropriate. Raul Ramos noted from the audience that the city had a good record of fiscal conservatism. He agreed with Woods ' view that it is more difficult to rescind the . 2% once it has been passed. He asked if the ordinance establishing the capital improvement fund would describe how funds would be spent. Cushing noted that this would probably be done as part of the budget document when it had been decided how much of the revenue would be used for maintenance 3 - November 29 , 1982 and operation. A policy would then be established as to the expen- ditures from the fund. Bailey noted that the Finance _Committee had suggested that 40 to 50% of the sales tax revenue be allocated to the capital improvements. He pointed out that prior Councils had never used Federal Revenue Sharing Funds for operating expenses and that he hoped that this practice would be continued. B. Johnson noted that this is the first time the utilities tax had been reduced. Ramos noted that this tax was paid by all residents of the city and efforts to reduce it were proper. DiJulio confirmed that the Capital Improvement Fund would be created by ordinance and the Council would establish the guidelines to be contained therein. The special meeting was adjourned at 8:10 p.m. Marie Jensen, CMC City Clerk 4 -