To battle the effects of a sluggish economy and keep pace with inflation, a 1 percent property tax hike has been approved in Oak Harbor for 2012.
The city council levied the increase, which would garner about $37,500, in a 4-1 decision at its regular Tuesday meeting last week. Council members Bob Severns, Rick Almberg, Jim Palmer and Beth Munns voted for the proposal while Jim Campbell was opposed.
Councilmen Scott Dudley and Danny Paggao did not vote as they were away on previously excused absences.
“I am going to support this again,” Councilman Jim Palmer said. “I don’t like it, I wish we didn’t have to do it but I think we need to continue to ensure the basic services for the city.”
Every year, state law allows municipalities to slightly raise property taxes without a vote of the people. They can be increased 1 percent or by a factor determined under the consumer price index, whichever is lower.
Before the vote was taken, City Finance Director Doug Merriman gave a detailed presentation on Oak Harbor’s financial situation. Covering everything from declining sales taxes to problems in Europe, he painted a grim picture in which the city will have to wrestle with hefty revenue losses next year.
That includes a reduction in sales tax income of about $50,000, a drop in permit revenue of about $18,000 and another $50,000 that pays for basic life support services may also be lost.
He didn’t provide figures, but the general fund may be taxed extra heavily next year with subsidies to the street fund and the senior center, which may see a reduction in county contributions, Merriman said.
While it wouldn’t come close to matching the expected loss of $118,000, he said the tax hike would help soften the blow. It also helps address inflation. It has a tendency to sneak up on you but shouldn’t be ignored, he said.
“Inflation is kind of like bald spots and beer bellies,” Merriman said. “You can ignore it as long as you want but pretty soon it becomes evident that you have an issue going on.”
Finally, he encouraged the council to see the increase as an investment because it permanently raises the amount the city can collect. For example, the same property tax hike next year would be based on the city’s total intake, which would include this increase. By rejecting the proposal, the city would be foregoing the additional $37,500 every year forever.
During a public comment period, Oak Harbor resident Sandi Peterson said these are tough times and that people were recently hit with increased utility rates to raise money for a new wastewater treatment plant.
“Lots of people are in very dire straits,” Peterson said.
She also brought up the city’s reserves, but decision-makers seemed largely unwilling to dip into the emergency pot. Palmer said it would go faster than you realize and Munns called it a “desperate crisis reserve fund.”
She, Severns and Almberg also addressed several state funding issues which could result in the loss of hundreds of thousands of dollars in city revenues.
“I hate to pay bills and I hate to pay taxes but if we don’t I think our city is in big trouble,” Munns said.
Campbell didn’t say at the meeting why he voted against the measure but said in a later interview that there has been a past trend of always approving the yearly increase “just because you can.” This was a small amount of money and it was time to say no, he said.
