Clark County Councilor David Madore believes he and his fellow councilors have an opportunity to make history.
“As far as I can see, no county in the history of Washington state has lowered property taxes,’’ Madore told The Reflector on Friday.
For the past three years, the Board of Clark County (BOCC) councilors have declined their annual opportunities to raise property taxes by the 1 percent annual limit. Now Madore wants to do even better than that.
Madore laid out a proposed 2 percent property tax cut for county homeowners in 2016 on his Facebook page last week. He said that he and his fellow councilors – Tom Mielke and Jeanne Stewart – will discuss the idea during the weekly board time Wed., Sept. 23.
“We’re going to make history when we do this,’’ said Madore, who championed the idea not only as relief to area property owners but also as a signal to potential businesses to move to Clark County while bringing their jobs with them. “It will say to all those businesses in California and Oregon, ‘look there’s a place, Clark County, that’s actually lowering their property taxes. Let’s go there.’
“Clark County has the 4th highest property taxes in the state,’’ Madore said. “We’ve reversed that trend in the last 2.5 years so that Clark County is now booming, providing more local jobs, significant new local business, and we've grown more self-sufficient.’’
Madore said it is well within the current councilors authority to direct county staff to forecast for 2016 by including the 2 percent tax cut.
“The BOCC directs our Clark County Manager to prepare for a 2 percent cut in our 2016 property tax levy (plus new construction), this December and to plan the changes necessary to balance our 2016 budget while maintaining our current fund balance policy,” Madore said of the action required.
Madore said the actually vote to set the budget would come in December.
Madore believes the county is healthy enough financially to justify the 2 percent property tax cut.
“Sales tax revenue has grown by nearly 10 percent per year while new construction increased property tax revenue by 1.4 percent per year with no increase in tax rates,’’ he said. “The combined revenue growth has been 4 percent per year with no tax rate increase. That’s very healthy. We are now in a position to cut property taxes since new sales tax growth is providing a larger share of total revenue.
“Proponents of big government want us to banish the thought of cutting taxes,’’ Madore said. “They urge us to spend it all and to always ask for more. But I believe that most citizens are not fans of big government continuously growing ever bigger. As an elected representative of the people, I work to lower property tax rates and limit the growth of government to a more manageable pace that fosters new wealth created by free enterprise rather than tax rate increases.’’
Stewart is cautious about the idea of the tax cut, not because she disagrees philosophically with Madore. Stewart just wants to make sure there are no pitfalls on the county’s horizon in the years to come.
Stewart asked the county’s finance department to put together forecast of the next five or six years. She received that report on Thursday.
“I think it is pretty revealing,’’ Stewart said of the report. “It shows me what I expected to be the case. There is a growing deficit that didn’t even include some expenses that we know are on the horizon. When I see that financial schedule going out five or six years, it causes me to really deeply question whether it would be advisable, reasonable or prudent to try to roll back property taxes by even 2 percent.
“If you’re talking about rolling back taxes, that is what would normally be considered in any business a drastic action and you need to know where you end up if you take those drastic actions,’’ Stewart said. “I would like to pay zero property taxes, but that’s not reality. We have to be realistic.’’
The report, prepared by Clark County Budget Director Adriana Prata, made the following assumptions:
Projected revenues – Property tax grows 1.8 percent annually, driven by new construction revenue; sales tax growth for 2015 is 8.5 percent, followed by 3.6 percent average annual growth starting 2017.
Projected expenses – Average projected growth rate for 2016-2020 is 3.2 percent annually; this recognizes PERS, medical and dental increases; as well as subsidies restored after one time reductions in 2015- 2016.
Prata’s report also forecasted some major liabilities and immediate pressing needs not included in the above projections:
IT projects (General Fund share) – Oracle, phone system, records content management, IT security & compliance: $6-$10 million one time.
Jail ventilation system – $800,000 one time.
General Fund Parks maintenance – $1.5 million/biennium ongoing.
Potential Comp Plan 2016 costs – $300,000 one time.
Various contractual increases (software licensing costs, misc. contracts).
“Please note it is not uncommon for the next budget cycle to show a projected deficit in operations, since expense growth rates typically outpace overall revenue growth rates,’’ Prata said. “Interventions were required each budget cycle for as long as I have been with the county, to balance each budget cycle and close that gap.’’
Madore believes the actions of the councilors and county staff during the past three years has made the tax cut possible.
“We have paid off millions in debt,’’ Madore said. “We are investing in the future instead of borrowing from the future. We have also discontinued all external lines of credit, which used to be a normal practice. We made millions of new capital investments that had been overdue for a very long time. We still have more things to do but all of those things are more than any other county commissioner board has done and we did it in three years.
“We inherited so much debt,’’ Madore continued. “We inherited very unstable financial policies. We settled a $10.5 million lawsuit and we have built reserves that exceed all state recommendations. It’s time for the citizens to get rewarded and get some tax relief because they provided all the revenue that allowed us to do that.’’