The Vancouver City Council on Monday signaled it will approve a 1 percent increase in the property tax levy, the maximum annual increase allowed under 2001's state Initiative 747.
The council will take a final vote following a public hearing at the council's next meeting, 7 p.m. Dec. 2 at City Hall, 415 W. Sixth St.
Councilor Bill Turlay questioned why the council was getting the information so late in the year and asked if the council would be having a 1 percent annual increase "forever."
Lloyd Tyler, the city's chief financial officer, told Turlay he only received property data from the county assessor's office a week ago. City Manager Eric Holmes told Turlay that the city, which must provide public safety and other essential services such as streets, is "in the forever business."
Since Initiative 747 capped annual levy rate increases to 1 percent, the city's revenues haven't kept pace with cost increases, Holmes said.
Since 2008, the city has cut staff positions by approximately 20 percent, and the 2013-14 biennial budget was down 12 percent from the 2009-10 total budget of $857.3 million.
Holmes said he feels it's his duty to present the council with the opportunity to increase the rate every year to help mitigate a structural deficit. The council can always vote no.
The city's general fund — $351 million for the 2013-14 biennial budget — gets money from property taxes, utility taxes and sales taxes.
There's a cap on the property tax rate. Tyler had predicted the city might reach that cap because falling property values had led to higher levy rates. But property values have actually increased, Tyler said, leading to a decrease in rates.
According to an example in a report from Holmes, the owner of a property assessed at $200,000 would have paid $634 to the city's general fund in 2013. In 2014, assuming the property value increased by 8.5 percent, the residence would be valued at $217,000 and the homeowner would owe $640 in city taxes, an increase of $6 for the year.
If the value declined or remained the same, the increase in annual taxes would be less, Holmes wrote.
In all, the levy increase would bring in an additional $419,000.
Councilor Jeanne Harris recalled the days before Initiative 747, when the levy amount could be increased by as much as 6 percent a year.
At this point, a 1 percent annual increase is administrative, she said.
"Save the bombastics for the big stuff," Harris said.
Councilor Jeanne Stewart said she's inclined to support the levy increase, as it would provide money for firefighter positions currently covered by grants set to expire next year.