The changing season usually means stacks of documents and heavy decisions for city leaders in Covington, who traditionally start planning the city’s annual budget in October. But this year the city has chosen to press pause on the budget until after the November election, thanks to political activist Tim Eyman’s Initiative 976.
“If I-976 passed we would lose about $400,000 a year in revenues that goes strictly to our roads,” Covington Mayor Jeff Wagner said. “So our budget workshops are held int he last Saturday of October. We pushed it to November 16. We’re waiting till after the election … there is no reason to have a budget workshop to have to come back to change things if we have a $400,000 short fall.”
The loss of the yearly $400,000 would be a blow to the city since the money from the car tabs is used specifically for maintenance and upkeep on the roads. Wagner said when it comes to building new roads or infrastructure, the city is able to receive state and federal grants to help ease the budget’s burdens.
“We are still putting in $1.4 million a year on road maintenance but we are doing $63 million in road projects right now,” Wagner said. “Those we’ve gotten grants for, but those are only for new roads. So the funding that we need for operation and maintenance depends on everything that we can get.”
Initiative 976 was created by Eyman and if approved by state voters in November, the proposal would do a number of things including limiting car tabs to $30 a year. The proposal would also eliminate 0.3 percent sales tax on vehicle purchases, lower fees on electric vehicles and snowmobiles, bar transportation benefit districts from imposing vehicle fees, and reduct the Sound Transit motor vehicle excise tax.
This would remove a number of transportation and transit funding mechanisms from state and local coffers, a report written by Sound Publishing’s Aaron Kunkler stated. The Office of Financial Management released an analysis reporting the state would lose more than $1.9 billion over the next six years, and local governments across the state would lose about $2.3 billion total. If approved, portions of the initiative would take effect in December.
The city did attempt many times to increase the city’s sales tax by 0.2 percent, $0.002 for every $1, to help increase funds for roads maintenance.
“We as council said this last time ‘if the voters approve of the sales tax increase … we’d eliminate the car tabs, $20 a car, here in Covington,” Wagner said.
If the sales tax increase had passed, the city would have gained about $800,000 a year in the budget for road maintenance and operation. This would double what is brought in by car tabs. Sales taxes are unique in a way because instead of taxing a certain group in a localized area, it would be a tax anyone shopping in Covington would pay.
“Right now we have one of the lowest sales tax, we only have a 8.6 percent sales tax ($0.086 for every $1),” Wagner said. “Because we are not inside the Regional Transit Authority. So when you go into Kent or Auburn it’s at 10 percent for sales tax because that extra portion goes to Sound Transit.”
Wagner said he isn’t sure how the vote is going to turn out since its a state-wide issue, but he believes Covington voters don’t realize how it will affect their own neighborhoods.
“I think a lot of people are voting on it because of Sound Transit,” Wagner said. “They think it’s going to affect Sound Transit only. But it’s going to affect all the local roads, all the local road projects, King County roads, state roads, all the roads people use to travel to and from work.”
Other budget considerations
Besides the uncertainty around road maintenance funds, the city is already looking at other budget numbers to prepare for the annual workshop in November.
Wagner said the sales tax revenue is about equal to what the city had in the 2018-19 fiscal year. Construction tax revenue is down but retail is up, Wagner said, so tax revenue is about to break even.
The city is expecting to have $13.62 million in revenue and $12.2 million in expenditures outlined in the upcoming budget proposal.
One of the largest expenditures each year is the city’s contract with the King County Sheriff’s Office for the Covington Police Department.
“Of (the budget) $4 million goes to our contracted police cost, annually,” Wagner said. “But it’s not just the officers it’s the vehicles and resources. We can get SWAT, Guardian One, Search and Rescue … if we need extra officers other contract cities come to help us. So the extra support from King County is what we buy into.”
This year the city added another officer to the Covington police force, which follows the city’s goal of hiring a new officer every two years. Wagner said the additional officers are necessary but sometimes can be a strain to the budget since it becomes an ongoing cost.
“The biggest issue we hear about is police coverage,” Wagner said. “If we could get it in the budget to add one every year that would be great … but that all depends on revenues and being able to sustain that. Because an officer is not one-time money its ongoing funds. No one would want to go to work and know they only have a job for a year. Some people think the $200,000 is one-time money, but we can’t do that.”
The city’s budget workshop is on Nov. 16 and afterwards the city will hold two public hearings before the council votes to approve a budget. The dates for the public hearings are to be determined.