Residents in Pierce County’s second-largest city won’t have to pay more tax on electricity and natural gas now that the Lakewood City Council has scrapped a proposed utility tax hike.
City Manager Andrew Neiditz had proposed increasing the taxes from 5 percent to 6 percent to generate an additional $350,000 a year to help balance his planned 2013-14 budget. Other utilities, including cable and telephone, already pay 6 percent, the maximum allowed under state law.
Council members decided now is not the right time to increase electricity and gas taxes. They asked city staffers to bring forward a balanced budget for adoption Monday without them.
“That’s one area where it’s really not discretionary,” Mayor Doug Richardson said after last Monday’s meeting. “People have to heat their homes and cook their food. Given the current economic times, we didn’t think it was wise to increase that tax.”
Neiditz asked the council to consider approving the tax increases with the condition that they expire after two years, when the economy might improve. Councilman Michael Brandstetter said that doesn’t make sense because the financial pain is being felt now.
“At the time we’re going through an economic downturn, the people that we’re trying to help by that differential (5 percent vs. 6 percent) are going through that same downturn with us,” Brandstetter said.
There was another reason council members said no: They don’t want to aggravate Lakewood voters before asking them next year to raise property taxes to pay for road work and street maintenance through a transportation benefit district. The council still must decide the amount of the increase, the projects it will pay for and when it will go to the ballot.
To fill the budget gap left by forgoing the utility tax increases, council members directed staffers to reduce costs for employee medical insurance by shopping around for a different plan. Neiditz said he has approached the city’s three labor unions about alternative medical plans.
Brandstetter had proposed making up the revenue by increasing the city’s gambling tax. But his colleagues said they can’t count on increased revenue from minicasinos in Lakewood that pay the tax because they are in fierce competition with Indian casinos for business.
In other budget news, council members held to Neiditz’s plan to eliminate three positions despite union opposition to one of the proposed job losses.
Dylan Carson, representing the city’s largest union, took exception to the proposed layoff of the city’s senior planner, responsible for Lakewood’s long-range planning. The job is essential for the city to meet mandates and deadlines of the state’s growth-management policies; not meeting them can carry financial consequences for the city, he said.
“Long-range planning for Lakewood’s future is good business sense, and it’s this kind of work that actively addresses issues like quality neighborhoods, functional transportation networks and attracting future businesses,” Carson told the council during a budget discussion this month.
Neiditz said last week that the city will meet its legal requirements and that other employees can be called upon to meet those state deadlines without contracting outside assistance.
He said the decision to lay off the senior planner came down to prioritizing economic development and other city activities over long-range planning.
The budget also calls for eliminating two assistant city attorneys and contracting as needed with outside lawyers to meet the workload. One of the positions is vacant.
Council members made a couple of other nips and tucks to the two-year spending plan prior to adoption.
They agreed to raise the monthly salary of the deputy mayor, who fills in when the mayor is unavailable, from $700 to $800 a month to recognize the added responsibilities of the position. The mayor earns $900 a month and council members make $700, and those salaries will remain unchanged.