Puyallup’s rosy financial picture has darkened in 2009, and city officials are looking at ways to save.
But their first move hasn’t been laying off staff or slashing programs: rather, the city is reconsidering $7.8 million in tax cuts that it promised citizens last year.
That’s how much city officials estimated it cost them to run the Puyallup Fire Department before it annexed into Central Pierce Fire and Rescue at the beginning of 2009.
Before voters approved the merger, city officials said that they’d reduce Puyallup’s taxes to offset the loss of the city fire department before 2010, when Central Pierce would begin taxing Puyallup residents for fire service. The City Council passed a motion specifying the amount of the promised tax reduction – approximately 7.8 million – in September 2008 and told residents in the Pierce County Voters Guide that “there would be no ‘double tax’” if voters approved the proposal.
Then the economy tanked.
Now, Puyallup officials want to reduce taxes by less than the $7.8 million total, citing declining city revenues.
“These are tight times,” Mayor Don Malloy said Tuesday. “These are tight times for governments, and these are tight times for families. I think we have to be responsible for both.”
Puyallup’s initial property tax levy proposal for 2010 would have lowered taxes by only $1.6 million, the value of the city’s current emergency medical services levy.
City officials have since begun reviewing other options, including the most recent council proposal to lower taxes by a total of $6.1 million. The council preliminarily approved the latest tax levy proposal with a 4-3 vote Tuesday. They’ll have to vote again on it before it’s final.
Some council members said they wouldn’t support anything but a tax reduction of $7.8 million, the full amount the council indicated it would cut last year.
“To keep any of that money would be a double tax burden on the citizens,” said Councilman John Knutsen. “I’m not going to support anything but what we agreed to.”
Councilmen Rick Hansen and George Dill also opposed the $6.1 million tax reduction proposal.
“We made a commitment,” Hansen said. “How can we not follow through with that?”
The council will take a final vote on its 2010 property tax levy at an upcoming meeting that has yet to be scheduled. According to state law, the city must set its 2010 levy rate by the end of November
Puyallup was one of the only cities in the South Sound that reported saving money last year while neighboring jurisdictions struggled. City Manager Gary McLean predicted that the city would end 2008 with a $6 million reserve in its general fund, or about 12 percent of the fund total.
Updated budget numbers, however, show the city brought in about $2.4 million less than expected during the end of 2008 and is projected to bring in $1.7 million less than expected in 2009.
After cutting $1.9 million in expenditures in 2009, the city now believes it will end the year with about $4.2 million in reserve, about $2 million less than originally projected.
The city expects revenues will remain below budget projections in the coming year, Finance Director Cliff Craig said.