For the first time in 40 years, this local city will ask voters to raise property taxes
The city of Gig Harbor will ask voters to approve a property tax increase for the first time in 40 years.
Voters will see the levy lid lift on the April 23 special election ballot.
At the Feb. 12 council meeting, the council passed a resolution 5-2 to put the measure on the ballot to increase the property tax rate to $1.10 per $1,000 of assessed value.
That’s a 40 cent increase, which the Local Voters’ Pamphlet says would add about $300 a year to the property taxes for a $750,000 home.
Council members Seth Storset, Mary Barber, Ben Coronado, Brenda Lykins and Le Rodenberg voted in favor of putting the measure on the ballot. Council members Jeni Woock and Roger Henderson voted against it.
The statement against the measure in the voters’ pamphlet said it “represents a 57% increase which would fall exclusively on city property owners.”
The statement said in part: “If Gig Harbor votes ‘no,’ this proposal would return to council for an August redo. Council could consider a sales tax, business and occupation tax, lower property tax, or better fiscal restraint.”
The voters’ pamphlet statement in favor of the measure said in part: “In the last ten years our city has added 7,000 people, four new police officers, 19 miles of roads, 24 acres of parks and 13 miles of water service. Growth has slowed significantly and associated revenue has declined.”
It went on to say: “The proposed property tax would provide our city with a dependable, steady source of funding to maintain our investments and high quality of life. The city has not asked voters to raise property taxes in over 40 years. Please vote yes to take care of our beautiful community we love.”
$2 million shortfall in 2025
The city’s finance director, Dave Rodenbach, told the Gig Harbor City Council at a Jan. 11 meeting that they’re “looking at a $2-to-3 million shortfall which is gonna hit us at the end of 2025 seriously.”
Rodenbach was referring to the city’s general fund.
Because of the shortfall, Rodenbach said they’ll either need to “drastically cut, or raise revenues.” Without doing either of those, service levels will not be able to continue as they are, he said.
Last year the city cut about nine to 10 administrative positions, saving them around $1.4 million, City Administrator Katrina Knutson said at a Feb. 12 City Council meeting.
“It started in community development, has since moved into public works and finance,” she said. “We are doing a lot with quite a few less positions.”
A $2 million shortfall could mean losing another nine to 10 positions, she said.
“That would be catastrophic for the organization,” Knutson said at the Jan. 11 meeting. “There hasn’t been anything more important since I’ve been in my position.”
Mayor Tracie Markley and Council member Brenda Lykins echoed that during the Jan. 11 meeting.
“We’re already operating at the reduced staffing levels and it’s starting to impact providing services to the residents of the city,” Lykins said.
“This has been weighing heavily on me,” Mayor Markley said.
She added that the city hasn’t raised property taxes since 1980, that it’s time to do so, and that the city has heavily grown.
In 2013 the city’s population was 7,913. Now, it has almost 14,000 residents, Knutson said.
“When you have that many people moving to a city, they all have wants and needs,” Knutson said at the Jan. 11 meeting. “They are needing the police to show up at their house, needing us to go check their water meters ... they want good streets to drive on.”
Instead of cutting more positions, council considered different options to raise revenues for the city’s general fund.
“The general fund is the source of revenue that the city relies on to provide basic services like police, street maintenance, and park and building operations,” according to Mayor Markley’s Jan. 12 Gig-A-Byte newsletter.
Over multiple study sessions, the council considered revenue options that included a property tax levy lid lift, a public safety tax, or a business and operations tax (B&O). They also discussed combining the options.
Gig Harbor property tax increase
The council settled on asking voters for a 40 cent property tax increase, because they didn’t want to have to come back to the drawing board later.
During the Jan. 11 meeting Rodenbach said a 21 cent property tax increase would give the city an additional $2 million dollars, which could get operations to the end of 2028, and then the city would need to have this type of conversation again.
If they raised property taxes enough to get $3 million, it could take operations to the end of 2032, he said.
Some council members were hesitant.
“I think we need to be very careful how much we put on the back of our property tax folks,” Council member Jeni Woock said in the Jan. 11 meeting.
Public safety sales tax increase
On March 25 the council unanimously approved a resolution to put a measure on the Aug. 6 ballot for a 0.1 percent sales tax increase.
If voters pass it in August “it would raise the sales tax rate from 8.9 percent to 9 percent and generate approximately $1 million per year for law enforcement services,” Mayor Markley wrote in her March 29 newsletter.
The city can’t have the sales tax measure on the April ballot with the property tax levy lid lift because they cannot increase sales tax unless it’s a primary or general election, per state law, Knutson said at the Feb. 12 council meeting. April is a special election.
Per state law, jurisdictions can only raise sales taxes by 0.1 percent, and it needs to be approved by voters.
Council member Le Rodenberg was in favor of a sales tax increase because “the thousands of people who come into the city everyday, and use our services, would also need to help out,” he said at the Jan. 11 meeting.
Council member Mary Barber agreed.
“I am really in favor of us getting the max amount from this public safety tax that we can,” she said. “I really like that it taxes the people who are using the city, as well as our residents, using our roads, our police, and our services.”
What residents had to say
Before deciding to put the property tax measure on the ballot, the council listened to public comments from residents at the Jan. 11 council meeting.
“I am not excited about this. I understand the need, but there are things I think we can do,” Melinda Stuart said.
Stuart suggested a sales tax measure in August, then a property tax measure in November.
Former Gig Harbor Mayor Kit Kuhn also spoke.
“Citizens will feel this for years,” he said. “Raising sales tax will make it harder for businesses to compete with online retailers.”
Former Council member Julie Martin spoke, too.
“This is the only dependable way we’re going to continue on supporting the values of this organization and this great city we live in,” Martin said. “I’ve worked and lived in cities where the council, the community hasn’t supported it. You see roads crumbling, you see police that are not professional because they don’t have the funds to hire them, you see staff who have become weary, you see people who are just disappointed and you start to see the erosion of this beautiful city you live in.”
Resident Michelle Jensen said she’d support paying more taxes if residents will get “real value,” from it.
“I’ve lived in various areas of Gig Harbor, and I currently live downtown,” she said. “Safety is more of an issue than I ever thought it would be when we made the decision to move. I have had the police and a bad guy in between my house and garage. I have an 88 year old that lives with us in the pool cabana and her safety is of great concern to me.”
She also said a tax increase would affect her daily decisions.
“I, for one, with a retired husband, will start thinking: ‘Do I really want to go out? Is that in the budget?’” she said.
Gloria Switzer and her husband have been homeowners in Gig Harbor for six years.
“We’re concerned about all the burden falling on the homeowner and what that will do to most of us who are retired and on fixed income,” she said. “It becomes an increasingly large burden.”
B&O tax could come later
The council could consider a B&O tax later on.
Council members said in meetings this year that they wanted to wait and learn more about it. Many seemed against it.
“Washington state also hits our businesses with a B&O tax,” Rodenberg said at the Jan. 11 meeting.
Rodenberg said big companies in the city have told him they will not stay in Gig Harbor if there is a B&O tax, and that small business owners would be upset.
A B&O tax is a “last resort,” for Barber, she said at the Jan. 11 meeting.
