Covington City Council took the first step to bring in more funding for affordable housing and resources by taking back some sales tax revenue from the state.
On Tuesday, Nov. 12, the council unanimously voted for an ordinance to adopt legislation to authorize a sales and use tax for affordable housing. The move was in accordance with substitute House Bill 1406.
During the 2019 session, the Legislature approved SHB 1406, which would allow cities to receive back some of the sales tax the state collects to be used strictly to help create affordable and supportive housing.
“It’s not an additional tax but a reallocation from the state to the local government,” City Finance Director Casey Parker told the council during its regular meeting on Oct. 8. “Our sales tax rate would stay the same. We are just stealing a little bit from the state.”
Cities are required to declare the intent to adopt an ordinance by Jan. 31, 2020 and to create and adopt an ordinance to take a portion of the sales tax by July 27, 2020.
“The city or county may use the tax for acquisition, construction or rehabilitation of affordable housing or facilities providing supportive housing,” Parker said at the Oct. 8 meeting. “And for the operation, maintenance and cost of this housing.”
For cities like Covington with a population under 100,000, the tax money can also be used to provide rental assistance those making less than 60 percent of King County’s median income.
Covington is eligible for a 0.0073 tax credit rate, which would generate a possible $42,860 each year. The tax credit rate would be in place for 20 years. The city could generate more money if more tax sale revenue is generated.
Councilmember Joseph Cimaomo Jr. was enthusiastic about the ordinance, saying he sees this as bringing Covington’s money back for the residents.
“When this was first brought to us I was very much in favor and I still am,” Cimaomo said. “We are asking to keep 0.0073 percent of monies paid in the 8.6 percent of sales tax Covington residents pay. (The) $42,860 annually doesn’t seem like a lot, but when you pair it together with the communities that are involved in (SKHHP), that will do wonderful things for this part of the county. I will gladly support this.”
SKHHP, as Cimaomo referred to, is an initiative called South King Housing and Homelessness Partners. Covington is one of many cities to partner with this initiative to pool money together to create better funding opportunities to create affordable housing in south King County. SKHHP includes Auburn, Burien, Covington, Des Moines, Federal Way, Kent, Normandy Park, Renton, Tukwila and King County.
Elections lead to further budget balancing
During the meeting the city council opened up a public hearing for the proposed 2020 city budget. Parker told the council the budget’s numbers will have to be adjusted and projects reexamined during the first budget workshop on Saturday, Nov. 16, since Initiative 976 seems to be passing in the recent election.
I-976, which will likely be approved by state voters, will reduce car tab fees in the state to a flat rate of $30. Because of this, many city entities like Covington will lose thousands in funding for road maintenance each year.
Councilmember Jennifer Harejehausen asked if any projects that are already underway would be affected by the initiative. City Manager Regan Bolli said city staff is working on a comprehensive list of changes to present to the council on Saturday.
Councilmember Marlla Mhoon asked Bolli if the potential lawsuits challenging the constitutionality of I-976 will halt the initiative. Bolli said unless the lawsuit is taken up by a judge in court, the initiative will take affect at the beginning of 2020. Councilmember Sean Smith then asked for a full list of road projects and other budget items that will be affected by I-976.
No one in the audience gave public comment on the budget and no action was taken by the council.