City Council approves three percent property tax increase

Published on Thu, Nov 15, 2012 by Brandy Kiger

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Things are looking mighty lean for the City of Blaine’s 2013 budget. 

At the November 13 City Council’s public hearing on the 2013 budget, finance director Jeffrey Lazenby presented the staff’s proposal for a severely reduced budget that was heavy on cuts across the board and offered little hope for revenue streams in the coming year. 

“It’s not good,” Gary Tomsic, city manager, said.

Revenue from taxes currently make up 56 percent of the city’s general funds, and Semiahmoo Hotel and Resort contributed significantly to that percentage through both sales and utility taxes.

With the announced closure of the resort, which will stop operating effective December 1, the city is anticipating a budget shortfall of $535,000 for 2013. Additionally, 99 percent of hotel/motel tax, which supports tourism activities, marketing and the visitor’s information center was also generated by the resort. 

“Our budget is based on worse case scenario,” Mayor Harry Robinson said. “We’re anticipating that the hotel will not be operating in 2013.” 

With the decrease in funding, the city has had to make some hard decisions about how they will allocate funds for next year, and that means reducing some of the services that they provide and limiting how much they can give to area organizations. Budget cuts include significant decreases in funding to the senior’s center, the Boys & Girls Club, street maintenance work, court services and the information technology program, among others. 

It will also force the city to lay off several city employees and leave two open police officer positions vacant, a situation that is less than ideal. “Personnel costs are what you have to go after to balance the budget,” Tomsic said. “It’s not nickels and dimes from these other sources. I’ve given pink slips to three city employees so far and their last day will be the end of January.” 

Utility revenues, in particular those from the wastewater facility, will be hit hard by the pending shutdown. The resort paid $681,000 in city utilities alone in 2011, and made up 6 percent of electric sales for the city and 10 percent of wastewater sales. In real numbers, that’s $287,000 and $332,000 of revenue respectively. 

“The wastewater facility budget is as tight as you can possibly get a budget without running a defect,” Tomsic said. “Even looking at other potential revenue sources, we don’t come close to making up those costs.”

“We’re not sure exactly what will happen with the resort,” he said, adding that he hoped someone would buy it and reopen it so the city could continue selling utilities to them. But, if that doesn’t happen? We’re going to have to look at a rate increase,” he said. “We cannot not pay the bills. You just can’t do that. We’ve legally pledged to set our rates in a way that they are adequate to pay our obligations. We don’t have a choice unless we find another source for funding.”

In a move intended to offset some of the pending shortfall, city council voted 6-1 to take the full levy amount available and increase the property taxes by 3 percent. The tax increase will amount to a $13-a-year increase in property taxes based on homes valued at $200,000. It will generate an additional $27,270 in tax revenue for the city and will be put toward street maintenance.

“We’re between a rock and a hard place. I’ve really struggled with the concept of doing something that is essentially irreversible while we’re still waiting to find out what’s going to happen out at Semiahmoo,” Robinson said. “I’m going to support it even though I do it with a great amount of reluctance.

Council member Paul Greenough echoed his sentiments. “I’ve uniformly voted against taking this rate increase in case of a rainy day. Now, it’s a rainy day.”

Councilmember Clark Cotner voted against the measure.

The proposed 2013 budget is still under review and the council opted to hold the public hearing open until November 26 to allow more of the community to participate in the process. 

North Whatcom Fire District Chief Henry Hollander also noted that the public notice regarding the sale of the Semiahmoo fire station is merely a formality to transfer ownership to the North Whatcom Fire District. “They are just transferring ownership over to us because we’ve been running it. It’s the same thing we did with the Odell Street station,” Hollander said. “It’s a little cleaner operationally if we’re the title owner.” All operations will remain the same for the station, and residents will not lose coverage. “We don’t anticipate and we’re not engaged unmaking any changes to this,” police chief Mike Haslip said. “One or two folks have expressed concern about this because they think that we are selling off the station and closing it. We’re doing our best to let people know that’s not the case.”