Camas talks taxes ahead of 2023-24 budget decisions

The Camas City Council will hold public hearings on Monday, Nov. 21, to discuss two possible tax increases that will help determine the final scope of the city’s biennial 2023-24 budget.

Earlier this month, during the Council’s Nov. 7 meeting, council members weighed five possible taxing options — including the scenario Camas Mayor Steve Hogan included in his proposed 2023-24 budget, which calls for a 1% property tax increase and a new 3% utility tax on the city’s water, sewer, solid waste and stormwater utilities.

If approved by Council in December, the mayor’s recommended 2023-24 budget would spend:

• $7 million to “address critical components of the city’s facilities assessment” report, which noted in July 2022, that the city is facing nearly * $35 million worth of needed upgrades and repairs to 17 of its publicly owned buildings, including $17 million in “observed deficiencies” that should be addressed before 2027;
• $2 million for “life-saving equipment” for the city’s public safety and fire departments;
• $8.6 million to enhance essential transportation routes throughout the city;
• $7.4 million for park and trail development;
• $1.2 million worth of investments in the Camas Public Library; and
• $1.3 million for “critical technology.”

The mayor’s proposed budget also calls for staffing increases throughout the city’s departments, including the addition of two police “overhires” and two police sergeants; a project manager, volunteer coordinator and recreation specialist for the parks and recreation department; two street maintenance workers; eight firefighters; an engineering manager; a records specialist; and a part-time library associate.

To pay for these and other staffing expenditures, Hogan has asked the Council to approve several revenue sources, including the 1% property tax increase allowed by state law; the new 3% utility tax; the use of around $24 million from the city’s $100 million fund balance; and the one-time use of more than $6 million in federal COVID recovery funds from the American Rescue Plan Act President Joe Biden signed into law on March 11, 2021.

The mayor’s proposed 1% property tax and 3% utility tax increases would add $909,000 to the city’s revenues in 2023, and $937,000 in 2024.

“Utility taxes are part of the ‘three-legged stool’ for revenue (property, sales and utility taxes) to fund general operations of a city in Washington state,” Huber Nickerson told the Council in October. “Utility taxes are imposed on the utility business and not on individual customers.”

A 3% utility tax on the city’s stormwater, solid waste, water and sewer utilities would generate an additional $615,273 for the city: $63,375 from stormwater; $97,992 from solid waste (garbage); $157,906 from water; and $296,000 from sewer, Huber Nickerson said.

The 3% utility tax would cost the average Camas family, which now pays $356 for bi-monthly utilities, an additional $10.68 every two months. A downtown Camas business paying an average of $2,225 every two months for city utilities would pay an additional $66.76 on their bi-monthly bill; while an industrial user with an average, bi-monthly city utility bill of $95,473 would pay an additional $2,864 every two months.

Huber Nickerson has said the City can also offer tax rebates or tax exemptions to low-income and/or disabled residents, and Washington state law also has provisions for property tax exemptions and deferrals for lower-income seniors over 61 and people with disabilities.

The finance director has urged city officials to approve a 1% property tax increase in 2023 and 2024.

“Property taxes are the primary revenue source for funding of general fund services and emergency medical services,” Huber Nickerson stated in her Oct. 17, staff report to the Council. If the Council does approve the 1% property tax increase, the owner of a $572,386 home in Camas would pay an additional $11 in 2023, Huber Nickerson noted in October, adding that “staff recommends the 1% property tax increase to preserve the base revenue source of the City’s general fund and EMS fund given the low financial impact to average homeowner.”

Huber Nickerson said Nov. 7, that city officials do have the option of foregoing or “banking” the annual property tax increase, but cautioned that would mean missing out on compounding interest.

“When you look at 10 years, that’s $700,000 to $800,000 that you’ve lost and can never recover,” Huber Nickerson said. “That’s one (full-time employee) or up to seven or eight (full-time employees) that you’ve lost, if you go out 10 years … I strongly encourage you to consider that lost opportunity.”

City leaders face structural deficit, ‘looming decisions’

The Camas City Council — with the exception of newly appointed Councilman John Nohr, who replaced former Councilwoman Shannon Roberts in early November — have been discussing the city’s various budgetary needs and revenue sources for nearly half the year. 

The mayor shared his goals for the 2023-24 budget with the Council in early July, and said he wanted to “focus on the needs of the city, now matter the size … and really do an inventory of what the city’s needs were,” Huber Nickerson reminded the Council during a planning meeting in early November. 

Even before that, Swanson added, the Council discussed some of the city’s most critical future needs. 

“About a year ago, we had the first of several Council planning sessions, and we talked about the obvious needs — the facilities at the end of (their) useful life (that were) inadequate for efficient, safe workspaces … staff with workloads that are untenable,” Swanson said. “We were beginning to see levels of service slip. And we had several discussions with council members about the city’s needs from both an operation and (capital) standpoint.” 

“We wanted to identify the needs and make sure we support those needs,” Huber Nickerson added, “(ensure the) public was engaged and heard; that the mayor’s and Council’s priorities are made (into) policy; and that the process is transparent.” 

The Council has, since June, discussed the budget in public during seven public workshops, one regular council meeting and four special meetings. City staff also engaged the public on budget issues at least nine times over the past three months – staffing booths at the Camas Farmer’s Market three times in August and September and hosting online events as well as an in-person open house at the Camas Public Library on Nov. 2. Members of the city’s finance committee also have been meeting monthly since October. 

Huber Nickerson and Camas’ interim city administrator, Jeff Swanson, have warned city officials that Camas may soon face a structural deficit — a persistent budget deficit that occurs when a government must spend more to maintain its levels of service than it can recoup in revenues — if it does not diversify its revenue streams. 

At a Nov. 1 Council planning session, Swanson said the Council can choose to “do nothing except make inflationary adjustments” to the City’s revenue streams, but that city officials would soon “have some hard questions about ‘What do we want to cut?’”

“Eventually, the structural deficit shows up and, at some point, you go to zero – where you can’t fund much of anything without some type of intervention,” Swanson said. 

The city administrator added that Mayor Hogan’s recommended 2023-24 budget is meant to “build a bridge to 2025,” when — if voters approve a regional fire authority district – the City could have greatly reduced fire and emergency medical expenses and the ability to focus on other city operating and facility needs. 

“The City is at a place where we have some looming decisions to make — especially about fire and EMS – and those decisions will greatly affect what your 10-year forecast looks like,” Swanson told Council members during a planning session on Nov. 1. 

Council members question tax increases, want to ‘sunset’ utility tax

The Council was asked on Nov. 7, to give direction to city staff on which of the taxing scenarios they wanted to see included in a draft budget that will be released to the public by Nov. 20 — one day before the Council’s public hearing at 7 p.m. Monday, Nov. 21. 

discussing revenue options, however, Council members disagreed about the staffing levels included in the mayor’s recommended budget. 

“I, with some reluctance, will not support the budget if it calls for (three-person fire) engine staffing without Washougal playing their role in the agreement they’ve signed,” Councilman Don Chaney told the other members of the Council on Nov. 7. “I still can’t get over that hump.” 

Chaney is referring to the interlocal agreement that merged the Camas and Washougal fire departments in 2013, which gave Camas the authority to make funding decisions regarding the Camas-Washougal Fire Department but split the costs between the cities 60-40, with Washougal agreeing to pay 40% of the bill for fire- and EMS-related staff, facilities and equipment needs. 

Over the past few years, however, the city of Washougal has had difficulty coming up with its share of the money for the growing fire department. 

Councilman Tim Hein said he also has “real concerns over staffing for the three engine crew.”
“I’m concerned not knowing the long-term solution of where fire is going … supported further by their (Washougal’s) unwillingness to pay. That sticks out a lot,” Hein said.  

“Washougal isn’t refusing to pay,” Councilman Greg Anderson pointed out. “They have no money without cutting their essential services.” 

Swanson agreed, saying Washougal would likely need to convince voters to do a levy lift to help fund the city’s share of the fire department. 

“They’re open to doing it, but there are a number of plates spinning right now and we’re talking about both communities needing to float a bond to pay for (necessary fire station replacements),” Swanson said. “And, at the same time, working toward an RFA (regional fire authority). … We anticipate the RFA vote will happen in 2024 … It’s like walking and chewing gum.” 

Councilwoman Marilyn Boerke said she knew the Council was “trying to minimize costs,” but was concerned by reports that the city’s inability to increase its staffing levels was having a negative impact on workers — and causing many Camas-Washougal firefighters to work mandatory overtime hours. 

“People can’t use their vacation … and we can’t even find people (to hire),” Boerke said. “I have a problem delaying all the hires. That’s challenging for me.” 

Councilwoman Leslie Lewallen also had concerns involving the fire department staffing levels. 

“What happens if we pass a capital bond (to replace aging fire stations) and Washougal doesn’t?” Lewallan asked. “Are we paying 100 percent of it?” 

“(If) we’re building a bridge to get us out of the fire business, as you’ve said,” Lewallen said, directing her question toward city staff, “and we move to (a regional fire authority), what happens to those taxes? Is there a provision that once we move to an RFA those taxes terminate or will this all come out in the wash?” 

Anderson asked if the city could sunset its utility taxes in the event that a regional fire authority forms and the burden of paying for the fire department moves out of the city’s general fund. 

“I’ve had real concerns (about the fire department’s staffing levels) since the fire alarm that turned into a real fire (on Feb. 14, 2018),” Anderson said. “I’m conflicted. … I’m pretty certain I know where I am (on voting for a utility tax), but I just don’t like where I have to be.” 

Councilwoman Bonnie Carter said she also had concerns about taxing citizens, but said she was approaching the 2023-24 budget discussions with an eye on public safety. 

“As Councilor Anderson said, I’m not comfortable risking our citizens’ lives in order to save face by not implementing a utility tax,” Carter said. “I’m really nervous about burning out our staff to the point where we don’t have staff, and we have to close fire stations. For me, that weighs pretty heavily.”
Carter said she also liked the idea of sunsetting a utility tax if an RFA forms. 

“Council could revisit revenue sources (at that time) and, if they want to implement it again at that point, that’s their choice,” Carter said. “Raising taxes is never a good feeling for any of us — our citizens, if they really asked, they would know we’re not looking for that. We’re paying the same taxes they are. But we need to protect our citizens. We need to protect our staff. … I’m looking at public safety as my guide here.”

Councilwoman asks staff to ‘get creative, think outside the box’

Some Council members added that they worried the expense of the taxes — the 1% property tax and any new utility taxes — would burden Camasonians who were struggling financially. 

“I’ve heard from citizens on fixed incomes who are struggling with inflation, gas prices, and putting food on their tables,” Councilwoman Leslie Lewallen commented during the Council’s Nov. 7 meeting. “I don’t like to think about raising taxes.”
Lewallen had similar concerns during the Council’s planning session the week before. 

“We have to answer to our constituents and say, ‘We’re sorry. We have to raise taxes  because we didn’t put a cap on a salary or something,’” Lewallen said during the Council’s Nov. 1 planning session.

When she’s asked about cutting the city’s budget, Lewallen said, she’s been told “there is no fat to cut.”
“OK. So how do we make our departments more efficient?” Lewallen asked on Nov. 1. “I’m sure there’s a way. That’s been keeping me up at night.”

Later, Lewallen brought the issue up again. 

“One question that has not been presented is where we could cut back … If there is no fat to cut … Can we then look at alternative solutions or think outside the box or run more efficiently?” Lewallen asked. “I can think of certain examples where I, personally, think we can run more efficiently. We could look at different sources of funding … our partnerships … a better arrangement with the library, maybe.”
“We have to go back to our constituents – to people literally having to choose to put gas in their car, feed their kids or pay their mortgage,” Lewallen said. “They don’t have any (fat to cut) either. … We have to figure out how to balance this and answer to our citizens. Let’s start getting creative and show me how we can run more efficiently. Because I don’t think a knee-jerk tax raise all the time is the answer.” 

The councilwoman added that she had asked during the Council’s “very first priority workshop,” in which Council members were asked to begin prioritizing the city’s needs for the 2023-24 budget, if city officials could discuss hiring a grant writer “to look across all the departments and see what is available … and ferret (those grant opportunities) to the right department.”
“That’s an area we could look at getting more creative and running more efficiently,” Lewallen said. 

City staff said they have been trying their best to “think outside the box” and utilize grants in Camas, but cautioned that grant-funded public projects are not always a boon to the city’s budget. 

The city’s parks and recreation director, Trang Lam, said her department could receive as much as $3.5 million in grants this year, but that most of that money would fund capital projects that still need city money to maintain and operate. 

“There are limited grants for operation,” Lam told the Council on Nov. 1. “Most are for capital. You get a grant, build a project and then you have to layer in operational costs. That’s the dilemma we sit with today … we’re in the ‘forever business,’ and have to take care of the assets we have. If we were to get more grants and build more projects, we have to know how we’re going to take care of it.”
The city’s public works director, Steve Wall, also chimed in during the Nov. 1 planning session, to speak to how city staff try to provide what the community – and its elected officials — want under current budget limitations. 

“We continue, as a city, to want more and more, right? … The thing we forget is that it takes effort to maintain those things,” Wall said. “We had this discussion just a few years ago. We were not going to build any new parks until we added maintenance staff, because we hadn’t done that in 20 years.”
The discussion about what it takes to maintain city resources over the long-term is important to have – and to make sure that community members understand, Wall said. 

“The community continues to want, and we continue to try and provide,” Wall said. “You get to make choices on what we fund and don’t fund. And we know there’s a trade-off. Either you let our levels of service drop because we don’t want to raise additional revenues — and that’s legit if you think someone can’t handle $12 a month, but when that same person comes to you and asks, ‘Why can’t we build whatever, or maintain (a city resource)?’ that same conversation has to happen: ‘Sorry, we can’t afford that level (of service).” 

Wall said that, in the eight years he’s been working for the city, this same conversation has come up at least three or four times. 

“We look at this stuff everyday and try to figure these things out,” Wall said, adding that city staff are OK with city councilors deciding to not raise revenues. “That’s OK. There’s nothing wrong with that. We just need to all be on the same page about what that message means to the community and what happens on the ground. It relates back to how we get creative. … We look at that constantly and are trying to find that balance.” 

Council majority backs 1% property tax, 2% utility tax … for now

On Nov. 7, the majority of the Council said they would support including a 1% percent property tax and 2% utility tax – with the caveat that the utility tax would sunset in the event of an RFA and that low-income people would receive some tax assistance — in the proposed 2023-24 budget that will be up for discussion during the Nov. 21 public hearing. 

Lewallen then wondered “what kind of impact” offering tax assistance to lower-income residents on their utility taxes might have on the city’s finances. 

“I’m a little frustrated and feel backed into a corner right now,” Lewallen said. 

Huber Nickerson said the city has a program in place already for low-income residents in need of tax assistance, and estimated offering help with the utility tax might impact the city’s finances by “less than $2,000 a year.”
Hein said he believed the impact would be higher. 

“I think it’s going to be more than that. I wouldn’t look to the (city’s) history on that one. I think it will be higher,” Hein said, before saying he would prefer to have a 1% property tax and 1% utility tax in the proposed budget. 

Councilors Chaney and Lewallan said they would support the 1% property tax but would not support a utility tax. 

Councilors Anderson, Boerke, Carter and Nohr agreed they preferred the 1% property tax and 2% utility tax scenario, with a sunset provision on the utility tax and help for lower-income residents who need it. 

Chaney pointed out that the Council’s vote is not final, but was needed to move forward with a proposed budget to bring to the public before the Nov. 21 public hearing. 

“This group may change our mind based on compelling evidence during (the public hearing),” Chaney said.