One year after voting 4-3 against taking a 1% property tax levy increase to help fund essential city services, Camas officials are again set to consider not only taking the only property tax levy increase allowed under state law, but also the possibility of using the City’s “banked” 1% increase it did not collect in 2023.
Camas Finance Director Cathy Huber Nickerson explained to Camas City Council members earlier this month that the 1% increase does not signify a 1% increase to individual tax rates. Rather, Huber Nickerson said, the increase would impact the overall tax levy amount collected by the City.
“The levy process is simple,” Huber Nickerson stated in her staff report presented to the Council during its Nov. 6 workshop. “The amount of money needed by the City’s budget divided by the value of all the taxpayers’ properties in the City … equals the tax rate for the City. This rate is then levied on the taxpayer’s property per $1,000 (in assessed property value).”
In 2024, for example, taking the 1% property tax levy increase would add around $146,000 to the City’s general fund, increase the City’s property tax levy to $15,081,851, shift the tax rate from $1.84 to $1.86 per $1,000 assessed property value (APV) and cost the owner of a median priced ($649,124) Camas home $1,209 in 2024, which is $138 less than that homeowner paid in 2023, and $12 more per year than they would pay if the Council opts to not take the 1% property tax levy increase.
The City uses property taxes to fund essential city services including police (29%), fire and emergency medical (22%), street (14%), parks and recreation (12%), community development (11%), library (8%), court (3%) and cemetery (1%) services.
City experiencing unexpected revenue shortfall
In early October, Camas City Council members learned the City was facing an unexpected revenue shortfall that could prevent the hiring of more than 20 positions in 2024, including eight firefighters, two police officers, two police sergeants, a parks project manager and three street maintenance positions.
“What we’re seeing in the economy is that housing is not what it was a couple years ago,” Camas Finance Director Cathy Huber Nickerson told Camas City Council members Monday, Oct. 2, during a Council workshop.
As the housing market and new home construction slowed, Huber Nickerson said, so have the City’s general fund revenues.
“The number we’ll have for next year’s property taxes, which capture August 2022 to August 2023 is much lower than it has been in many years,” Huber Nickerson said.
To account for the revenue shortfall — $1,436,788 less in taxes thanks to lower rates of new construction and lower sales taxes and $340,670 less in charges for services due to slower residential permitting and planning — Camas Mayor Steve Hogan has proposed a new 2024 budget for the Council’s consideration.
City Council members plan to discuss the mayor’s proposed budget, as well as revenue sources such as the property tax levy increase and the City’s temporary 2% utility tax during upcoming Council workshops and meetings. The Council must approve a 2024 budget before the end of the year.
Council members signal willingness to use ‘banked’ property tax levy increases for street preservation
Four Council members — Don Chaney, Tim Hein, Leslie Lewallen and John Nohr — voted against the property tax levy increase for 2023, but the majority of the Council also voted to “bank” the increase, meaning they could save the increase for another time and possibly, as the Council did when they banked the increase in 2009, dedicate the money to a specific need, such as street preservation or fire department needs.
Although the City’s expenditures — including salaries and benefits for City employees — have increased by more than 1%, the state limits cities and other jurisdictions from increasing property tax levies by more than 1% annually. Not taking the annual increase, according to Huber Nickerson, compounds over time and would equal $1.3 million in lost revenues over the next 10 years.
“It’s important because it’s your only growth in property taxes,” Huber Nickerson told the Council Nov. 6. “Staff recommends the 1% property tax increase with banked capacity to be dedicated to public health and safety, and to preserve the base revenue source of the City’s general fund and EMS fund, given the low financial impact to the average homeowner.”
Huber Nickerson explained that the City has seen “a dip” in home values in 2023, meaning the majority of Camas homeowners will pay less on their property tax bills in 2024, even if the Council opts to take both the 1% property tax levy increase and use the banked 2023 increase.
“If the assessed values go down, (taxpayers) pay less. The majority of the City’s (assessed property values) went down, so the majority of Camas homeowners will see that,” Huber Nickerson explained to the Council.
She said the City will lose the compounding effect of the property tax levy if Council members vote against taking the increase.
“Doing nothing puts you in a bigger hole,” Huber Nickerson told Council members during their Nov. 6 workshop. “The majority of the bills the City pays, including firefighters’ and police officers’ (salaries) are going up about 3.01 percent. And medical benefits are up 6 to 9 percent, so if you’re trying to just tread water, it’s hard to do even with (the 1% increase).”
If the Council votes to do both, the owner of a $649,124 home would pay $1,217 in property taxes in 2024, which is $28 more per year than if the Council does nothing, but still $130 less than they paid in 2023.
At least one Council members who voted against taking the 1% property tax levy increase in 2023, said they’d changed their mind.
“I voted for that last year, and I’ve had the opportunity to study it,” Councilman Nohr said. “If you look at Clark County, (which) didn’t take it for years, they’re in a significant structural deficit.”
Nohr said he hoped to “rectify (his) mistake” and vote to not only take the 1% property tax levy increase in 2024, but also to use the 2023 banked capacity, to “dedicate it to something appropriate so it doesn’t depreciate over time.”
Council members Don Chaney and Bonnie Carter agreed with Nohr that the City should use the banked capacity from 2023, to help pay for a specific City need.
“We’ve talked about the need to spend money on the streets,” Chaney said. “Our streets are worsening by the day. I’m not sure the $100,000, or whatever we talked about, is going to do anything — and, as we get into the new budget, I’ll be asking for more money for streets — but the cost of goods and labor is higher and higher. I’m changing (from) where I was a year ago, based on need not want. I could support the 1 percent and banked capacity based on that need.”
Carter also said she would “echo” Chaney, and be in favor of using the banked 2023 property tax capacity — which would equal a little under $100,000, according to Huber Nickerson — to dedicate to preserving the City’s streets.
After hearing from Nohr, Chaney and Carter, Hein agreed that he “could go with Option 3, as well,” which was the option for taking the 1% increase and using the banked capacity.
Councilwoman Jennifer Senescu did not weigh in on the issue. And Councilwoman Leslie Lewallen, who voted against the property tax increase for 2023, said she could support using the banked capacity “with designation that it is specifically for street preservation.”
Huber Nickerson said she would bring the issue back to Council during its meeting on Monday, Nov. 20.