Tacoma’s top city official told members of the public Monday that all revenue from a proposed tax increase on utility companies would be dedicated toward road repairs and not used to plug other holes in the city budget.
Tacoma’s Proposition 1 would raise about $11 million annually for street repairs by imposing an extra 2 percent tax on phone, natural gas and electric company earnings.
To make sure that money goes toward roads, Tacoma City Manager T.C. Broadnax is recommending the Tacoma City Council create a special fund for all revenues from Proposition 1 rather than funneling that money into the city’s regular operations budget.
Money from the Proposition 1 fund would directly feed the city’s street fund, Broadnax said.
“We are going to focus very much on transparency and financial accountability by creating a new and separate fund — what I would term a lockbox — to make sure the funds go where voters expect them to go,” Broadnax said at a community meeting Monday discussing the ballot measure, which goes to voters Nov. 5.
To create a separate fund for Proposition 1 revenues, the Tacoma City Council would have to pass a resolution or ordinance authorizing it.
That hasn’t happened yet, but Broadnax said Monday before a group of citizens at Lincoln High School that the council would be considering the legislation “in the next few weeks.”
Broadnax is also recommending that the City Council commit additional utility earnings tax revenue to the Proposition 1 fund each year — money beyond what the tax measure would raise.
While Proposition 1 would raise Tacoma’s tax on gas, electricity and phone company earnings from 6 to 8 percent, other utilities — including wastewater, surface water, sewer, water and cable — are already taxed at the 8 percent rate.
Broadnax is recommending that 2 percent of the gross earnings taxes on those other utilities also go into the Proposition 1 fund for streets.
Broadnax’s idea would result in an additional $6.2 million being set aside specifically for road repairs in 2014, he said. That is approximately what the city already spends on street operations annually, but under Broadnax’s proposal, the money would be set aside in a dedicated account and not be subject to the city’s biennial budgeting discussions.
The City Council would still need to pass an ordinance or resolution dedicating the existing revenue stream for road repairs.
Should the council take that action and voters also approve Proposition 1, roughly $17 million in revenue would be dedicated solely for street repairs each year, according to city estimates.
Broadnax said his proposals aim to address some citizens’ concerns that money from Proposition 1 could be diverted from street needs such as filling potholes, improving traffic signal timing and adding crosswalks near schools. Some citizens also have expressed fears that the proceeds of Proposition 1 would supplant the money the city already spends on streets, rather than providing additional revenue, he said.
At Monday’s community meeting, however, citizens said their main concern was that the tax could cause residents’ utility bills to rise, which they said would hurt low-income families.
Utility officials have said that because Proposition 1 would increase their operating costs, eventually it would result in increased rates for utility customers.
“We’re all for fixing our roads, but you can’t get blood out of a turnip,” said Lynnette Scheidt, president of both the Eastside Neighborhood Council and the Dometop Neighborhood Alliance.
“How do you convince people that having a pothole repaired is better than them having heat?” Scheidt asked.
Tacoma City Councilman Marty Campbell said that the city has programs to help low-income residents pay their utility bills, and the City Council has recently expanded that assistance.