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HomeMy WebLinkAboutCity Council Meeting - Council Workshop - Minutes - 08/17/1999 f • COUNCIL WORKSHOP MINUTES August 17, 1999 COMMITTEE MEMBERS PRESENT: Chair Leona Orr, Sandy Amodt, Tom Brotherton, Tim Clark, Connie Epperly, Judy Woods, Rico Yingling STAFF PRESENT: Dena Laurent, May Miller, Lori Hogan, Cyndi Wilbur, Don Wickstrom, Tom Brubaker Initiative 695 and the Potential Impacts to the City. Government Affairs Manager Dena Laurent—By way of overview, I-695 does at least two things. It first repeals the Motor Vehicle Excise Tax replacing it with a flat $30 license tab fee. Now currently the state law levies a 2.2%mvet on the value of all motor vehicles. There's also a vehicle license registration fee of$23.75. The first time registration fee is $27.75. I-695 also repeals the Travel Trailer and Camper Excise Taxes and the State Clean Air Excise Tax. The potential estimated general impact on a registered vehicle is about $142 in savings. The second thing that I-695 does is require a public vote on virtually any new or increased state or local government charge with the exception of higher education tuition, civil and criminal fines and victim restitution. So that's everything from the change in the registration fee for T-ball to our annual property tax levies. At the state level, there will be a number of impacts if I-695 passes. The mvet that has been a major source of government income for the State of Washington since 1937. The estimated impact on the state for the 1999-2001 biennium is $1.1 billion and then the following biennium the 01 to 03 biennium would be $1.7 billion. The most significant impact on the state is the loss of that funding for state transportation accounts. The impact there in the 99-01 biennium is $538 million. On an ongoing basis the mvet that funds that is about 48% of state transportation projects, including those projects approved under Referendum 49 by the voters last November. Not only would the impacts be significant at the state level, but the county impacts would also be significant. In King County, the repeal of mvet slashes funds for Public Health Programs and County Criminal Justice Programs totaling $9.7 million for Public Health and $5.9 million for Law and Justice. The County Roads Fund would lose another$1.1 million for a total $16.7 million dollar impact on the county. 1-695 could also have an impact on funding for Sound Transit. While it doesn't directly repeal Sound Transit's taxing authority, it repeals the statutes that govern how those tax rates are calculated. So there are some concerns in that area. Finance Director May Miller talked about the estimates put together for the impacts of I-695 on the city. On the back page of the handout, there is a spreadsheet of the numbers we've put together. The local share on the pie chart is estimated to be about 24%. I believe 10% of that goes to counties and the cities get about 13-14% of the allotment. So while we're not the biggest piece of where the decrease in revenue would be, it does impact our budget. We put together the losses on a six year plan because a lot of capital is based on six years so we need to look beyond . what is next year, but if we just look at next year's budget, the Motor Vehicle Excise Tax right Council Workshop, 8/17/99 2 now is estimated to be about $10.50 per capita. That would give a loss next year of Sapproximately $972,000. That and the State Travel Trailer and Camper Excise Tax only brings in another$21 thousand. So very close to a million dollars lost. The RCW 82.44.155 really stated that this money was to be used for the purpose of police and fire protection, so the use of those funds have been used for public safety, specifically for police and fire protection. If you say that was in positions, that would be about 14.7 positions. This is only a $1 million for one year and over six years is $6.4 million, so it really adds up and is a fairly significant amount. I looked at their budget and it's about 3% of the whole Public Safety Budget if you add the police and fire together. So this I think would be the most direct and immediate impact that we would feel. We did find out after we put these numbers together and sent it out that we would get the final quarter of the tax of what had been in effect the year before because it will be on the lag into January of 2000. So we would get about a$250,000 the very first year but then it would end if this were to impact and I didn't have that on here because we just found that information out. In the Criminal Justice Fund, it doesn't take away the main funding but for those special programs they put together. That's about$1.83 per capita and that's for high crime, innovation, children at risk and our domestic abuse programs. Those are the ones that the funding would stop for. This is about 1.8 staff, close to 2 people in this and that fund is used currently to fund some of those positions in that area. That's about $133,000 for one year and $860,000 for six years. So that would be another direct impact that we would feel in our city. • The next area we get the Motor Vehicle Registration Fee and we get around$588,000 for that and that goes into our Street Fund and equals our Overlay Programs which we spend right now about $420,000 a year on. It's more than our Overlay Programs it would have to be Overlay Programs plus. Now there's other things in there—we do sidewalks, we do bicycle paths, we do our little transit bus, we do a lot of things with this money so there would be some hard decisions. But this amounts to $580,000 for one year or almost $3.7 million over six years. Now the question is whether we may get part of the new $30. We feel it would probably be court tested before we would know. Again, in this case we would get a quarter of that first year and after that, we wouldn't get any more funds. Beyond that we get some Capital Project Street Fund money. And right now,we have about $415,000 coming in 2000 and $445,000 in 2001 so those would be specific projects. And beyond that, there is some possible grant losses which is $13.7 million over the next three years. And those grants are really for the 196th and the 228`h corridor projects. Those are the Urban Arch Aerial Transportation Account that we get money from and the TIG the Transportation Improvement Grants that we get. So those grants also come from state funding. If the state is the one that doesn't have the funding, the money would not be available to potentially fund those grants. So it could have a real significant impact on our proj ects. The other thing we put on here which could have some indirect cost to us is the County Health. Several years ago we were always paying to the county for health inspections of restaurants, doing shots, and all the things the county does. We were paying about $1.2 million a year and when they changed the tax around they applied this money to the county and then the cities no Council Workshop, 8/17/99 3 longer had to pay this fee. We don't know if the county has the money to pay for the health or how that would be funded. So that's certainly an issue that would come up. It's not money we're getting directly now. It's money the county's getting but who would pay for that would be the question. In addition to that, if we had to go forward for a fee on t-ball or anything, or a fee increase over any program, a special election would cost about $70,000 a year annually. Dena Laurent—When you pull all of the numbers together in general, the impact on Kent and the General Fund is about $1 million a year to our General Fund where we spend for Public Safety and is $1 million in the Street Fund. It's $130,000 to the special targeted grants in our Criminal Justice Fund, and there's the $70,000 a year on an annual basis to have your special election for all your fee changes, and new classes and your property tax levy. So that's $2 million and$200 thousand and that's before we start to talk about Transportation Grants. There are a lot more questions than answers. Let me suggest some of the ones that we have that we don't necessarily have answers to but they're on our radar. The first is, How will the state legislature respond to the loss of dollars? Will we see here at the local level any of the $30? What will happen to all of the Transportation Grant Programs, all the funding for other local programs where we receive some support from the state level? Would a substitute revenue source be approved by voters? And could a substitute even be identified? On the other side is what if I-695 is voted down, what will be the legislature's response? What impact could that have on our opportunities to receive support for programs? In terms of county issues, what would King County's response be to the loss of their Public Health Funding? And would they be asking cities to start coming up with some of that funding as well as what adjustments would • they be making in their Criminal Justice operation to accommodate their loss of criminal justice funding? Would we see impacts on their staffing levels, either in patrol or in the court or in public defense that could impact our clients who live around Kent and then impact our system? Looking beyond the state and county issues another question we have is whether the language in the initiative limit requires a vote on specific per unit tax or fee increase changes or does it require a vote upon total amount collected. In other words, you could approve a certain property tax levy rate but what happens if the revenue comes in over what we had projected and said in our voter issue—does that mean that we have to go back out to the voters because we collected too much? Do we have to refund because we had a good economic year? Or what happens if the revenue doesn't come in as we had expected? It's one of the questions we have,based on the language in the initiative. Another area of questions we have concerns bonds. A number of municipal bonds that cities sell are dependent upon future revenue streams and in some cases in increases in either water rates or some rate for service in order to pay off the bonds in the future. The state constitution says that the initiative cannot overrule our authority to implement those increases if we have already made commitments based on that public bonding authority. So, while that seems okay,there are other questions about new bonds and about our bond rating. We're already receiving information that cities who have gone to be reevaluated for their bond rating are having serious problems evaluating their financial condition because of the unknown fiscal health of their city as a result of the potential of I-695. As well it would be very difficult to sell bonds at this time or in the Council Workshop, 8/l7/99 4 near future until we know what the outcome of the initiative is and then, once we know that, there may be even additional uncertainties because of the potential legal challenges. There are a number of constitutional defects in the way the initiative was drafted. The one that's easiest for me to understand is that there are two major issues on the same initiative and the way the constitution allows initiatives to be filed, you can't have two major issues. They would have to be separate initiatives. But I'm sure the courts will instruct us as to that measure if the initiative passes. And then finally the I-695 exempts motor vehicles from personal property taxes, but it would apparently resurrect a personal property tax on most motor vehicles at the rate of I% so it may have unintended impact, and if there is then the exemption goes away under I-95 and then we can levy or the state can levy a 1%tax on motor vehicles, and they're all kinds of questions about where does that money go and how will that be allocated? Councilmember Tom Brotherton--This year we adopted new rates for building inspection fees. This was a long overdue increase. We hadn't done it in ten years and they were way out of date and we adjusted them so they reflected the amount of labor that had to go into the various features of the permits. I wonder how many other fees we have like that that are also out of date that perhaps we should be thinking about adjusting so that they cover the cost of providing the service before this comes to a vote. Maybe we ought to take a close look at all the fees we charge to make sure they're at least covering the cost of the service they provide. Or maybe come to a decision to subsidize them. May Miller—We'll work with the departments to try to have them determine if they seem to be in line. Leona Orr—I would just like to suggest that as we move along with this and we start getting more information about what the impacts would be, we probably need to have some idea as we go into our budget cycle of areas where we can make adjustments to make sure that we don't lose essential services. I don't think there's anyone here that would be real excited about losing 14.7 people in our police and fire departments. That's a tremendous impact. So I think we need to start thinking about if this were to pass where we would make adjustments because that's in my opinion one of the most essential services we provide so we have to be careful. We can't just say well we've lost money from there so the money's gone, they live with it. I don't think that'll work for any of us. So we need to have some idea of adjustments that we can make within our entire budget so that no one is completely devastated. Judy Woods—You might bring us updates to every Operations Meeting, if you have some, as we're getting into that budget preparation time. Some parallel descriptions for us might be helpful in the event that 1-695 doesn't pass. And should it pass, this is what we're asking departments to look at. It's my understanding that you've already asked departments to begin to consider what their priorities would be and what they would be living without. The earlier we have that understanding the better. I am more than happy to have council members come to Operations. But we'd be happy to have you come and give us any updates to these questions. Tom Brotherton—To plan that a little bit further—perhaps the council owes it to the departments to review the policies that we set forth in terms of priorities and what we did at the beginning of this year and we evaluate those in terms of what we may have to do for the budget this year the end of this year. We set certain goals and priorities and that may change dramatically. Leona Council Workshop, 8/17/99 5 Orr—And that's very true. And that's why I'm suggesting that we start looking at those kinds of . things and so that we are prepared and it doesn't hit us November 2"a and then we start scrounging around trying to deal with it. Rico Yingling—I think one of the problems is that when taxes become too complicated so that the common person doesn't understand where their money is going, they get worried and concerned and then they back off and it's a concern that they don't know what's happening with their money and they don't like it. If we could simplify that somehow and make it more understandable and less complex, I think it would go a long way. Report on Regional Issues Dena Laurent—I might just share a few issues that's we're working on at the staff level. You may recall a Senate Bill 5914 that we worked on last year regarding buildable lands and building and realtors concern that we are not doing a good job of meeting the targets set out by King County under the Growth Management Act. A number of housing units we need to add each year to keep up and we know that builders and realtors are still interested in this issue. And so at a staff level a number of cities, in concert with Suburban Cities, are trying to look at some proactive measures so that we could all work together on that. If we need to approach the legislature to do something whether it's some kind of funding source or some kind of program or loophole or exemption thing we need to work on, we can do that, but we also more strongly believe that there are a number of actions we could take without going to Olympia. In fact, on a county level, GMA asks us to work on these issues among the cities and with the county. • Second, there are lots of elected officials serving on lots of different types of transportation committees and bodies throughout the entire county and Puget Sound and we suburban cities types have a number of appointments to the Regional Transportation Committee at the county level and a couple of other bodies. And last spring a lot of those folks who sit on those different committees were saying it would be really nice if we had a policy that speaks to those things that we're collectively trying to seek at all of these different venues and tables because inevitably they end up overlapping, and we're all talking about the same pots of money. And so at staff level, we've been working with the Public Works Directors and Suburban Cities to craft something that will kind of be guiding principles for actions on transportation issues. I think that'll help a lot with turnover that we'll see in Suburban Cities representation on those committees as well as how we coordinate among our neighbor cities for funding. The meeting was adjourned.