Among items discussed during the Thursday, Nov. 9 Mountlake Terrace City Council meeting was a review of the 2024 property tax levy ordinance and resolution.
City of Mountlake Terrace Finance Director Janelle Lewis presented the council with two options for the 2024 property tax levy.
The first option is the 2023 base amount (no property tax increase) that uses tax money from new construction minus the money the city will no longer pay South Snohomish County Fire and Rescue since voters approved annexation into the regional fire authority. She explained this would bring in $3.16 million in property tax revenue in 2024 and decrease the total tax per average home by $191 over 2023.
The second and staff-suggested option includes a 1% property tax increase plus new construction, less the amount for the fire annexation. Lewis said this would bring in $3.2 million in property tax revenue in 2024 and decrease the annual total tax per average home by $185 annually over 2023.
The Mountlake Terrace Six-Year Financial Forecast shows property values and revenues for Mountlake Terrace’s general fund falling below expenditures. Lewis explained that operating fund revenues for 2024 are projected to be $18,875,642 compared to 2024’s projected $19,485,088 operating expenditures.
The six-year financial forecast shows property values and revenues for the city’s general fund falling below expenditures. Lewis explained that operating fund revenues for 2024 are projected to be $18,875,642, compared to 2024’s projected $19,485,088 operating expenditures.
The City of Mountlake Terrace can increase its property tax annually up to the Implicit Price Deflator (IPD) or 1%, whichever is lower.
The Washington State Office of Financial Management states that an IPD measures the prices of a broad group of goods and services, including all health care consumption, rather than just out-of-pocket expenses and consumer-purchased insurance.
The IPD for 2023 tax purposes is 3.67%, so the maximum a city can increase its property tax levy for 2024 is 1% without using banked capacity.
Lewis said the Snohomish County Assessor’s Office gave a total assessed value for taxes in 2023 estimated to be $5,280,437,499, representing a .036% increase from the city’s total assessed value in 2023.
The estimated increase from new construction is $50,799,868 (.96% of the total). The remainder of the increase in assessed valuation is due to an estimated decrease in all other property values of .92%.
“When assessed values increase, the rate decreases,” Lewis said. “And when assessed values decrease, the rate increases.”
The decrease in property values does not mean property tax will decrease by (negative) -0.92%; a city can increase annual property taxes beyond 1% by using banked capacity.
Lewis explained that the city used to collect two property tax levies for operations: one for general operations and a second for EMS. The EMS levy is going away due to annexation and will no longer be collected by the city.
Mountlake Terrace used to contract with South County Fire for fire and EMS, with property owners paying their city governments for this service through the city’s property tax levy. The city then paid South County Fire to provide fire and EMS. With annexation, property owners will pay South County Fire directly for fire and EMS services starting in 2024.
A third property tax levy (a bond levy) will be collected in 2024 to repay the debt approved by voters in 2017 to fund the civic campus project.
Lewis explained that Washington state has a budget-based property tax system, not a tax rate system.
A public hearing and the adoption of the property tax levy ordinance and associated resolution has been scheduled during a special council meeting set for 7 p.m. Wednesday, Nov. 29.
In other business, Stormwater Manager Laura Reed presented a review of the 2024 Stormwater Comprehensive Plan work order update with Jacobs Engineering.
Staff are seeking authorization for a work order with Jacobs Engineering to support the Stormwater Comprehensive Plan update for 2025 through 2031, included in the city’s 2023-2024 adopted budget.
Reed explained that this funding would cover three to five larger projects and that many deferred maintenance projects took priority during the last contract.
Staff recommended authorizing the work order in an amount not to exceed $188,596.54.
The council agreed to send the contract to the consent calendar for approval during the Nov. 16 regular meeting.
Shelly Helder of Gordon Thomas Honeywell Governmental Affairs (GTHGA), the state lobbyist for the City of Mountlake Terrace, updated the city council on the Washington state legislative agenda. These updates focus on the city’s effort to secure funding for initiatives that include transit development, affordable housing and infrastructure.
Helder said the most recent operating budget forecast shows that the state has roughly $900 million more than anticipated when the budget was adopted. However, the transportation budget is “somewhat of a different picture.”
Helder said that transportation projects around the state continue to come in higher than they were estimated. WSDOT estimates that projects will cost around 30% more than what was appropriated.
“Transportation budget writers are essentially facing a budget deficit,” Helder added. “We’ll need to figure out how to balance the existing biennial budget.”
The capital budget has about $95 million remaining in bonding capacity for the supplemental year. Helder said it is “a relatively small amount for a supplemental capital budget.”
This presents a challenge for the Main Street Project in 2024.
Helder said that most of the funding that supported the first phase of Main Street during the 2023 session was $2.1 million from the state. To support the second phase, GTHGA focused its efforts on the capital budget with the knowledge that the transportation budget had no new revenue.
She explained that increased demand on the capital budget forced the budget writers to be much more selective about what they chose to fund. They determined that the Main Street project, although historically funded from the capital budget, was more appropriately funded through the transportation budget, which already has a deficit.
“So frankly, we’re in a tough place headed into 2024,” Helder said. “Of course, we can, and we still will, submit a funding request for direct appropriation.”
However, before the start of the 2024 session the lobbyists will meet with state legislators representing Mountlake Terrace. They plan to give them a tour of the neighborhood and the project area to visualize the city’s plan.
Along with transportation, the major themes expected during he 2024 legislative session will continue to be the environment, affordable housing and public safety.
Legislators will continue to focus on missing middle housing and finding dedicated funding for those projects.
The Climate Commitment Act, Washington state’s version of a cap-and-invest program, has generated substantially more revenue than anticipated, Helder said, so the Legislature will consider policy changes to potentially limit the revenue in the future. Further, lawmakers will decide whether to return some of the collected revenue or how to allocate the unexpected revenue collected.
The Legislature is also likely to continue ongoing discussions on public safety with perhaps more emphasis on law enforcement, recruitment and retention. According to Helder, the new Senate Ways and Means Chair, June Robinson, said the state’s behavioral health care system is the biggest fiscal challenge for lawmakers in the 2024 session.
Following Helder’s presentation of the legislative agenda was a review of Gordon Thomas Honeywell Governmental Affairs’ contract with the City of Mountlake Terrace.
The firm has been the lobbying service provider for the City of Mountlake Terrace at the state level since 2012 and helped obtain funding for the Main Street project and Ballinger Park.
Mountlake Terrace City Manager Jeff Niten said that a two-year contract that lines up with the two-year session of the state legislature session serves the city’s interests “in a linear fashion.” Also, the contract will continue to be $48,000 annually.
Approval of the contract was moved to the Nov. 16 consent agenda.
A last-minute addition to the Thursday agenda was a review and approval for a vehicle purchase over $75,000 – in this case, a dump truck. Public Works Director Jesse Hoffman said the council previously budgeted for the truck purchase but added that “costs have gone up pretty significantly.”
Due to increasing costs and a competitive purchasing environment that requires the city to issue a purchase order in advance, Hoffman is requesting preapproval of the purchases.
Hoffman also said staff put in a 15% contingency because the city was told “outright by the dump bed makers that the prices were going to change by next summer.”
He explained that the city initially planned to purchase a larger truck for $150,000 but then changed to a slightly smaller truck to better suit their needs – but that truck is now priced at $276,000.
The city budgeted $120,000 for the dump bed but the current estimate is $135,000 with a $20,250 contingency for a total request for that is $155,250.
The total request to the council is $431,250.
The situation has some irony. Hoffman explained that it would take until the third quarter of 2024 to complete the truck chassis and an additional six months to make the dump truck’s bed.
The truck that requires the city to act so quickly won’t be completed until early 2025.
Councilmember Erin Murray asked about the cost of the truck, the potential for future cost increases and the fleet budget. Hoffman stated he’s not sure how much longer the uptick in costs will continue. He said that the public works budget is healthy, adding that the City of Shoreline contracts with Mountlake Terrace for $100,000 – $200,000 in work that requires a dump truck.
Councilmember Steve Woodard asked what would happen if the council said “no.”
Hoffman explained that since dump truck G-16 was converted to an asphalt truck, the city no longer has a non-CDL truck that recreation and parks staff can drive.
The purchase order for the new dump truck was added to the Nov. 16 consent agenda.
The next city council meeting is Nov. 16. The meeting will begin at 7 p.m. in Mountlake Terrace City Hall, 23204 58th Ave. W., Mountlake Terrace. To attend the meeting online, visit zoom.us/join and enter meeting ID 810 1113 9518; no passcode is needed. You can see the complete agenda here.
To listen via telephone, call 1-253-215-8782 and enter the same meeting ID.
You also can view livestreamed meetings and past video recordings at www.youtube.com/cityofmlt.
— By Rick Sinnett