Council creates tax district for roads3 public hearings set over the next month on question of funding
In a 5-2 vote, the City Council on Monday, April 3, created a Transportation Benefit District capable of levying taxes and fees to pay for road maintenance and improvements.
The council did not decide on a specific funding scheme, though most of the evening’s discussion revolved around that issue.
The council is planning to hold three public hearings – April 17, April 24 and May 1 – before approving a funding plan and placing it on the Aug. 1 primary ballot by May 12. An initial work session discussion is set for the council’s April 10 meeting.
Six people spoke during the public hearing, including Tim Eyman.
“I really think even if voters were in the mood for higher taxes, which I don’t think they are, Sound Transit has literally just sucked the oxygen out of the room,” Eyman said about that district’s voter-approved increase in car tab fees and sales taxes.
As of April 1, the sales tax in Mukilteo has risen from 9.8 percent to 10.3 percent, with the Sound Transit increase accounting for the difference. Car tab fees jumped by 0.8 percent of the value of a vehicle, or $80 for a $10,000 car.
As the council begins weighing a 0.2 percent sales tax against a $20 car tab fee, some are concerned Mukilteo will end up with the highest sales tax rate in the state, ahead of Lynnwood at 10.4 percent.
“We don’t want to be recognized as having the highest sales tax in the state,” Tony Markey said during the hearing. “We’re tied for second now [with Edmonds]. A 0.2 percent increase would vault us into the lead. I’m not sure that’s a poll place we want to hold.”
In years past, the city has dedicated about $450,000 per year from real estate excise tax revenue to transportation infrastructure maintenance, with $300,000 going to pavement preservation and $150,000 going to pedestrian improvements.
After a year of work, the city’s Wise Investment in Transportation Taskforce recommended in July 2016 that the city dedicate a minimum of $900,000 per year to pavement preservation, and the council agreed.
Last month, the council adopted the By The Way Plan for biking, transit and walking, which recommended $435,000 per year for pedestrian improvements.
Together, the price tag comes to $1.335 million, $885,000 of which would not be covered by the historically used real estate excise tax revenues. Through its newly formed taxing district, the council is considering two ways to raise that money.
The first funding option is projected to generate $1.16 million each year through a 0.2 percent sales tax increase. The second option is projected to generate $1.175 million each year through a $20 vehicle license fee and a 2 percent increase in the solid waste utility tax, which was last increased in 1993.
Councilmembers Steve Schmalz and Christine Cook opposed the creation of a taxing district, saying the money could be found elsewhere in the budget.
“We have the funds,” Schmalz said. “Why use the tool if you have the funds already?”
Cook agreed, saying the council has not taken the time to dig through the budget to find the money.
“I feel we might be moving too quickly on this,” Cook said. “I don’t know that we have given ourselves enough time to really scour the budget, to discuss all of the options.”
Cook also said raising taxes could push lower-income people from the community.
“We talk about wanting to have diversity in our community, but if we make our community so expensive, we may inadvertently create a more homogenous community,” she said.
Leslie Gregg and Brian Loomis urged the council to not create the taxing district.
“Our sales taxes and real dollars in property tax are already high,” Gregg said. “Increased taxation will only lead to a death spiral of smaller revenues as residents and businesses flee the heavy hand of government.”
Loomis, who lives on a private road, questioned why he should have to pay.
“Because we are on a private road, is there compensation for myself for the car tabs since I’m not going to be using your money to fix my road?” he asked.
Glen Pickus told the council to ignore the naysayers.
“I believe the dollar amount you are looking at is the absolute minimum you need to do this right,” he said, adding that other taxing options would be more painful. “The task force clearly identified the need. There is no doubt about it.
“This is not a matter of Sound Transit. This is what Mukilteo needs to bring our roads up to speed and keep them that way.”
Lani O’Conner said she understands the need to maintain roads in order to avoid higher costs down the road.
“I think we all are feeling pinched with all the new taxes,” she said.
“Here’s how I feel about taxes for infrastructure: Yes, I’m willing to pay for it, but I’m not willing for it to disappear into a general fund. I want to know what I’m paying, how long it’s going to last and when it’s done.”