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EDITORIAL: Tax cut may be ill-timed
A tax cut always sounds good, but such a proposal before the Oak Harbor City Council should be thoroughly scrutinized before it is approved.
The city has gone through one financial crisis after another in recent years, due in large part to various tax-cutting statewide initiatives. But city coffers are now, temporarily at least, flush, with more revenues coming in than expenses going out.
A couple of major factors have resulted in a return to fiscal health. First, the city this year will be receiving $220,000 in unexpected property tax income due to an error in calculation by the Island County Assessors Office. Second, the city has saved some money thanks to efficiencies undertaken by Mayor Patty Cohen. Taken together, the moves have officially ended the fiscal emergency declared in February, 2002.
As a result, City Councilwoman Sheilah Crider has proposed suspending a utility tax that was approved to help address the fiscal emergency. That tax brings in some $500,000 annually which it appears the city could do without this year, at least.
Criders motion is not out of order. Its a good idea to discuss the utility tax, which the council will do in a meeting Feb. 18. But cutting taxes at this time may be premature.
The economy is iffy, at best. The citys sales tax revenues have held up well, but there is no certainty consumers will continue to spend at their present rate. If the state jobless rate continues to lead the nation, or if war puts a chill on spending habits, then Oak Harbor could see tax revenues dive.
These are delicate times, when the nation is on the precipice between war and peace, between a deeper recession and growing economy. It may be premature for the city to eliminate an important revenue source in an atmosphere of such uncertainty.
This does not mean the extra revenue should be spent. Instead, put it in the bank for the next rainy day. We suspect we wont have long to wait. If not, the tax can always be eliminated next year.