Oak Harbor approves maximum property tax jump
July 3, 2008 · Updated 12:20 PM
"An overflow crowd of city employees and residents urged the Oak Harbor City Council to raise taxes Tuesday night.The council obliged.The council unanimously passed three ordinances that will increase the citys share of property taxes by a total of 11.15 percent next year.And another tax increase might be on the way.For a homeowner in the city, the increase will translate to about a 2.8 percent hike in property taxes, City Finance Director Doug Merriman said. That amounts to an extra $46.44 a year in property taxes for the owner of a $150,000 house.The city administration proposed the tax increase, which involved increasing the amount the city captures in sales tax by 6 percent the maximum allowable under state law.In addition, the city unbanked the 5.15 percent increase that the city council failed to pass last year. By law, maximum property tax increases that are not passed can be banked and used in future years if there is substantial need, Merriman said.This time its an emergency and Im happy to vote for it, said Councilmember Rex Hankins, one of the council members who blocked the city staffs request to take a maximum 6 percent increase last year.Hankins may get a chance to re-examine another tax increase that he helped block. At a candidates forum with the fire department Wednesday night, Councilmember Richard Davis promised to bring back a proposed 6 percent utility tax increase and a new 0.2 percent business and occupation tax for a second council vote.That tax increase proposal was defeated by the council on Oct. 19, but might be voted on again Nov. 16.Property taxes are another matter.The property tax hike that was passed Tuesday will increase city revenue by $234,230 next year, but it wont lessen the blow of Initiative 695. The initiative would dismantle the Motor Vehicle Excise Tax system and replace it with a flat $30 fee. If the voters pass the initiative next Tuesday, the city will lose $800,000 next year in funding from sales tax equalization.The city staff has drawn up two budgets this year one that will be used if I-695 passes and one that will be used if it doesnt. Both budgets assume that the property tax increases are passed.In essence, the property tax increase simply balances the budget if I-695 doesnt pass.The proposed utility tax increase and new B&O tax which the city administration proposed, the council voted down and Davis promised to bring back was specifically earmarked for making up revenues lost if I-695 passes.City employees urged the council members to pass the property tax increase because they are worried about a loss of city services and city jobs if any more is cut from the budget, with or without I-695.If the initiative does pass, several employees asked the council to consider raising more taxes instead of dropping services or laying-off employees."