MV budget as bad as feared; tax levy gets slight bump

Elliott Wilson

Nov. 5, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- MOUNT VERNON -- There is no sweet surprise in next year's city budget. It is as grim as expected, Finance Director Alicia Huschka told the City Council Wednesday.

Nearly half a million dollars in reserves will be used to balance the 2010 budget, as currently written. That will leave Mount Vernon's operating reserves about $1 million short of the city's goal of $3.1 million, or two months worth of operating expenses, according to Huschka.

The city will not get much of a property tax boost either.

Wednesday, the council set the 2010 property tax levy, which accounts for 28 percent of the city's operating revenues, at $6,527,841.

That's equal to last year's levy, plus a $132,585 bump to capture property tax revenue from new construction in the city.

Huschka said she and the mayor were sensitive to the economic downturn, high unemployment and negative inflation in making their recommendation to the council not to increase property taxes.

Last year, Mayor Bud Norris asked the council for a 2 percent increase to the property tax levy as what he called a "perfect storm" of declining sales tax revenues and a downturn in development gathered.

But the council kept the levy the same, except for capturing revenues from new construction. Next year will mark the sixth straight year the council has forgone property tax increases, excluding the increases for new construction.

To hold the 2010 levy relatively even, the City Council had to adopt two ordinances Wednesday -- the usual one specifying the size of the next year's levy and another, never before required ordinance to justify the city's need for the revenue.

Initiative 747, a ballot measure sponsored by anti-tax activist Tim Eyman and approved by voters in 2001, limits property tax increases to the lesser of inflation -- which for next year is -0.848, marking the first time it has been negative since the law was enacted -- or 1 percent per year, before additional increases for new construction.

Huschka said that cap can be lifted, however, if the council finds it has a "substantial need." And indeed the council voted 6-0 in favor of an ordinance stating just how sour the city's revenues are.

Also Wednesday, the council approved the annexation of 26 acres located west of Freeway Drive and at the western end of College Way.

n Elliott Wilson can be reached at 360-416-2147 or at ewilson@skagitpublishing.com.

Newstex ID: KRTB-1109-39476959