The Bellingham City Council has agreed to modify a low-income housing levy measure to address financial issues raised by Mayor Kelli Linville and City Finance Director John Carter.
At their Monday, May 21 evening session, the council voted 7-0 to take another step toward a property tax increase measure that would provide money for two different low income housing funds, if a majority of voters approve in November. The larger fund would get about $2 million of the annual levy proceeds, and that money would be directed toward programs that would benefit people making less than 50 percent of the city’s median income. The other fund would get $1 million a year from the levy, and would pay for programs that would benefit people making up to 80 percent of the median income.
The council directed city staff to draft legal language to that effect for additional council consideration at their June 4, 2012 meeting. If council gives the modified levy proposal final approval, the tax hike would face city voters during the Nov. 6, 2012 general election.
At a Monday afternoon committee session, Linville and Carter warned the council that the levy as originally proposed would take a significant bite out of the city’s taxing capacity during its seven-year term.
Under state law, the city now has a total levy limit of $3.60 per $1,000 of assessed valuation. The city already collects about $2.35, leaving about $1.25 in remaining capacity. The housing levy as originally drafted would take another 36 cents out of its potential $1.25 in future taxing authority.
But state law also grants an exemption for housing levies aimed at the neediest people who make less than the median income. Levies for that purpose do not count against the limit.
Linville told the council that she preferred a levy that would be 100 percent for the neediest, and would therefore add no restrictions on the city’s ability to raise property tax revenues in future years. The mayor has repeatedly expressed concern about the future costs of environmental cleanup and street and utility projects on the waterfront. The city also faces eventual pension fund liabilities.
But the council chose a hybrid approach that would reduce, but not eliminate, the housing levy’s impact on city taxing capacity.
Linville said it’s up to the council and the voters to weigh the impacts and make those decisions. She added that she’s all for increased aid to the homeless. But she also wants to make sure that the council stays focused on the city’s overall financial situation.
“I would say that any decrease in the capacity for us to meet our unmet needs in the city is a concern,” Linville said.
She hopes the council will adopt a two-year budget process that would encourage more long-range thinking about revenues and expenses.