Gig Harbor City Council hopes sales-tax increase will solve ‘the needs of tomorrow’ | Tacoma News Tribune

The Gig Harbor City Council will ask voters to increase the city’s sales-tax rate to pay for future street improvements.

“We are proposing a new tax,” Gig Harbor Mayor Kit Kuhn said Monday. “This tax is not a new idea, but we decided to choose a sales tax over increasing property taxes or adding a car tab tax.”

If everything goes as planned, the proposed sales-tax increase would appear before voters in November. It would raise money for a new Transportation Benefit District.

“Since the boundaries of the tax district are the same as the city boundaries, we are the members of the board,” Councilman Spencer Hutchins said during Monday’s council meeting. “We will be acting as a separate entity under state law.”

The council voted unanimously to pass Ordinance No. 1392, which established the Transportation Benefit District.To be placed on the November ballot, initiatives and measures must be turned into Pierce County Elections by Aug. 7.

City leaders decided November would be the ideal time to have a vote on the proposal since it’ll produce a higher voter turnout. If the proposal passes, the tax increase can be implemented in the beginning of 2019.

THE PROPOSED TAX

Kuhn said he has been talking and working with Councilman Michael Perrow on the idea of a increased sales tax to benefit transportation projects for almost a year. Kuhn says the tax is the best choice for city residents because the cost of the tax will not fall on their shoulders alone.

“During the day we have an 80-percent increase in our population,” Kuhn said. “So a majority of the tax will be paid by city visitors. There will be 65,000 people from outside of the city who will pay this tax, and about 10,000 in the city who will. But it’ll benefit everyone. We are trying to solve the needs of tomorrow.”

Gig Harbor Finance Director David Rodenbach said the current sale tax rate is 8.5 percent. Within the sale tax is the state tax, a transportation tax and some county taxes. If the voters choose to increase the tax it will go up to 8.7 percent.

“The city gets 1 percent of the (current sales tax),” Rodenbach said. “Out of that 1 percent, we net .85 percent. If the Transportation Benefit District is passed, and there is no other tax proposed, it will go up to 8.7 percent.”

Rodenbach said of the 8.7 percent, 7.5 percent is divided by the outside entities and 1.2 percent will go to the Transportation Benefit District.

Kuhn says the Transportation Benefit Board should put in rules to keep future city leaders from diverting the sales tax to other budgets. City staff explained the money from the tax would be given to the board to be used for “motorized transportation projects, not non-motorized transportation projects.” This rule means no bike lanes, sidewalks, bike racks or pedestrians trails would be funded with the tax money.

“So if you have a road project with a bike lane, the (Transportation Benefit District) board’s money will not be able to fund the bike lane,” City Administrator Tony Piasecki explained at the meeting.

Members of the public who attended the meeting expressed two concerns: Some wondered if $1.6 million would be enough to cover large road projects, such as the Connect the Gig project, and others asked the council to reconsider funding for bicycle and pedestrian lanes.

Local architect Marlene Druker, dressed in full cycling gear, said creating more paths and safe roads for cyclists and pedestrians would help ease traffic, benefit businesses and create a more desirable city.

“When travel by foot or bike is made safe and accessible, more of it occurs,” Druker said.

Resident Karen McDonald said $1.6 million doesn’t sound like enough money to “do anything worthwhile,” citing the cost of the recent Harbor Hill Drive extension project, which was estimated to cost $11.5 million at the beginning of the project.

City staff explained the money would be used as a negotiating tool with other funding entities, such as the state and federal government, to help increase funding for future projects.

“Usually these funding entities ask for on average a 10-percent match,” Piasecki said. “So we can now say, ‘We have $1.6 million to match’ up to a $10 million fund.”

Every member of the council said they were in support of raising the sales tax, even Councilman Jim Franich who has made it known he generally is not in support of raising taxes.

“This was a hard sell for me,” Franich said. “But I do appreciate that it’ll be used to help fix the roads, which is one of my top issues.”

Kuhn told the public he hopes to see a grassroots campaign formed to advocate for the tax, since there likely would be a “no” campaign.

“We are not allowed to use city resources to campaign for this, and we must stay unbiased as a city,” Kuhn said. “I hope to see the community come behind this and help us.”