Oak Harbor council rejects tax hikes
July 3, 2008 · Updated 12:19 PM
"The Oak Harbor City Council voted not to raise city taxes Tuesday to make up for a projected loss if Initiative 695 passes next month.The 6-1 vote means the city will have to find $800,000 to cut from the budget if the initiative slices deeply into the funds the city gets from motor vehicle excise taxes.City Supervisor E.T. Silvers says the D.A.R.E. program, Fort Nugent Park, the park department’s summer recreation program, the Senior Center respite program, and up to 15 city employees may be on the chopping block. “I feel that council acted inappropriately in voting down the ordinance,” he said. “It’s going to endanger public services.”The council voted 6-1 to turn down a proposed utility tax increase and a new business and occupation tax that the city administration proposed. Only Councilman John LaFond voted for the tax increases.As the measure was written, the taxes would have been repealed if I-695 does not pass.If passed by voters, I-695 will dismantle the current Motor Vehicle Excise Tax and replace it with a flat $30 per vehicle fee. Since the vehicle tax generates money for the state’s sales tax equalization program — a program that funnels more money into towns that generate less-than-average sales tax receipts — Oak Harbor is projected to lose $800,000 next year, which is about 10 percent of its $8 million budget.To balance the budget if the initiative does pass, the city administration proposed raising utility rates by 6 percent and creating a business and occupation tax of 0.2 percent, which would be levied on gross sales amounts.The utility tax increase would have raised about $360,000 a year while the business and occupation tax would raise about $400,000. Next Tuesday, Oct. 26, the council will decide whether to raise property taxes within the city. The city has already budgeted for a 6 percent increase in the city’s share of the property tax, plus “unbanking” the 5.8 percent increase that was not passed last year.Property tax increases require a supermajority five votes to pass. Since the city has already budgeted the money, another $227,000 will have to be cut if the increase does not passBut tax increases do not seem to be popular.Several local businesspeople spoke out against the proposed tax increase and new tax at the Tuesday council meeting. Tamra Sipes, the interim director of the Oak Harbor Chamber of Commerce, said an increase on business taxes would be detrimental to some local businesses.“It’s not in the city’s best interest to raise B and O tax,” she said, “especially when we have 35 to 40 empty store fronts already.”Patti Carter, the owner of Pony Mailing and Business Center, said she thinks it’s unfair to target businesses. “Why should the business community have to make up for the shortfall of taxes?” she said. “This is just another example of why businesses will not come to Oak Harbor.” George Churchill, a local realtor, said that the utility tax would make affordable housing even harder to get in the city.On the other hand, no new taxes means services will be lost if I-695 passes.In order to find $800,000 to cut from the budget, Mayor Steve Dernbach said he’ll ask each department head to find 10 percent to cut, but the City Council will have to make the final decisions.Silvers and Dernbach said the city’s budget is already bare-bones and there will be a noticeable decline in city services after the cuts.While lay-offs will be the city’s last resort, SIlvers said firefighters and police department staff may have to be cut. He predicted that emergency response times will grow and the city’s fire rating will decline, which will cost property owners hundreds of dollars in insurance costs.“I’m extremely concerned about losing city services that citizens have come to expect,” he said. “I don’t think they realize that there is a real threat they will lose much of it.”The council is scheduled to meet on Nov. 3, the night after Election Day, to set dates for budget workshops to discuss the cuts, or a possible revisiting of the tax increase issue.Property tax hike?The Oak Harbor City Council will consider raising city property taxes at its next meeting on Tuesday, Oct. 26, at 7 p.m. at City Hall, 865 SE Barrington Dr. The city administration has proposed to raise the city’s share of property taxes by the maximum 6 percent, and to “unbank” the 5.8 percent increase that the council did not pass last year. The tax increase needs a supermajority of five votes to pass."