Balancing a city budget means looking into a foggy crystal ball to predict what may happen during the coming year and swallowing hard when it comes to taxes.

The Covington City Council approved an ordinance to increase property taxes to the legal limit allowed, 1 percent, plus levy the city’s entire banked property tax capacity, which amounts to about $146,000.

The one percent increase brings the city $20,931 over the base levy of about $2 million.

The total funds the city will receive from the property tax levy in 2011 is about $2.3 million, which includes the banked capacity.

The vote on the 1 percent property tax increase and taking the bank capacity was split, 5-2 with council members Wayne Snoey and Mark Lanza voting no and Mayor Margaret Harto, Mayor Pro Tem Jeff Wagner, council members Marlla Mhoon, David Lucavish and Jim Scott voting yes.

The members all supported the 1 percent property tax increase, but were split on levying the entire bank capacity.

The Legislature allows cities to take less than the maximum amount allowed in property taxes and hold the portion not taken, called banked capacity, which can be levied at a later date. For example a city is allowed to levy a 1 percent increase in property taxes in a year. City officials decide to take half the 1 percent, .5 percent, and bank the other half or .5 percent, which can be collected at a later date.

City Manager Derek Matheson said, “We have been saving (the banked property tax capacity) for a rainy day. It is raining.”

Matheson noted the city has cut more than $1 million from expenditures and last year 10 full-time employees were laid off from the Community Development and Public Works departments. Also several employees were reduced to half time and city employees have not received a cost of living allowance for two years.

Prior to approving the property tax and banked capacity levy vote, Lanza made a motion to take half the banked capacity and Snoey supported him.

“I just don’t think we have to take the whole amount,” Lanza said. “We’ve always been prudent and we could have taken it in the past and we haven’t.”

Snoey said he did not see an “absolute need for the entire amount…. I think it is prudent to do this, but I have a lot of trouble supporting the whole amount.”

Mhoon pointed to the money cut out of the budget for parks.

“How committed are we to Covington (community) Park,” Mhoon said. “It seems prudent we take the banked capacity, balance the budget and have money to put back into parks.”

Lanza’s motion to take half the banked capacity failed 5-2. Snoey and Lanza voted for the motion.

The council continued the discussion as the members considered the 1 percent property tax increase along with the levy for the full banked capacity amount.

Mhoon said of the banked capacity levy, “I truly believe it is responsible governing. “

Lanza explained his dissent over the banked capacity when he stated, “Do we need this money? Sure. (But) this is the time for belt tightening, cutting back. I think we can get along without this one.”

Harto noted the number of staff members who had lost their jobs and the cuts made in the budget since the recession hit in 2007.

“If this small amount will help keep us away from a crisis, whatever it may be, I am supporting it.”

Snoey said he understood the difficulties of losing a steady income and returning to a business without a guaranteed cash flow.

“This will be taken poorly by those (who are) unemployed and underemployed,” Snoey said.

According to Matheson the average home would see an increase of about $23 per year from the city’s 1 percent property tax increase and the banked capacity levy. The city manager said that same home saw a $281 decrease in their tax bill from 2009 to 2010. These figures are from the King County Assessor’s office. With the $23 increase in 2011, the average home would still be paying about $258 less than 2009.

Matheson said the property tax funds will go into the general fund and pay for law enforcement and infrastructure maintenance for streets, storm water systems and parks.

Despite the tough times, city officials have no plans for layoffs in 2011 and hope to keep the ship tacking straight while all are on the lookout for better economic weather ahead.