Collaboration in Civic Spheres

Archive for the ‘Taxes’ Category

CBO Director Stresses Rising Public Debt, Taxes, Spending

by Matt Rosenberg March 14th, 2011

SUMMARY: In a public presentation and official blog post last week, U.S. Congressional Budget Office Director Douglas W. Elmendorf warned of rising U.S. public debt. It hit $9 trillion or 62 percent of Gross Domestic Product at year-end 2010, and is projected by the CBO to rise to at least 77 percent of GDP by 2021, or nearly 100 percent if certain current tax breaks are extended, raising the risk of a national fiscal crisis. Elmendorf stated that the growing public debt, driven by deficit spending, necessitates hard decisions by Congress about federal budget and tax policies – in order to reverse course and stimulate income growth and investment while maximizing the benefits of federal spending. He stressed that eliminating waste and inefficiency will not be enough to get the nation’s fiscal house in order and accented the recommendations of the Presidentially-appointed National Commission on Fiscal Responsibility and Reform, that Congress should cut spending on federal health care programs, defense, agriculture, and military and civil service retirement, while also ending selected federal tax breaks. He recommends Congress aim to settle on the needed fiscal reforms in the near-term – even if they are implemented more gradually – in order to help stabilize the economy.

Expert Review Panel To WA State: Aggressive Finance Plan Needed For 1-405/State Route 167 Mega-Project

by Matt Rosenberg January 17th, 2011

SUMMARY: The 40-mile-plus Interstate 405/State Route 167 is already badly congested and will get worse as population grows over the next 20 years unless a planned $1.95 billion tolling and demand management mega-project is funded and completed. Even under tolling of the full corridor, there will be a funding gap of $685 million to $1.2 billion which policymakers must address. New taxes and/or borrowing or private investment would be needed as well.

The project would add electronic-only express toll lanes and manage peak-hour traffic demand. Aggressive tolling strategies are needed to help the project succeed – including few or limited toll exemptions for private vehicles unless they are carrying three or more passengers.

A new more pervasive approach to tolling technology is recommended, with photo enforcement to deter payment evasion and a requirement that all in-region drivers have “Good To Go” electronic tolling accounts and dashboard-mounted “transponders” which are read by overhead highway panels.

State Audit Critiques Seattle Port’s Property Management, Cargo Crane Oversight, And Under-reported Pilferage

by Matt Rosenberg January 14th, 2011

SUMMARY: A State of Washington performance audit found the Port of Seattle: failed to sufficiently report to the state, as required by law, 41 instances of pilferage valued at $107,000; failed to monitor actual usage of its cargo cranes and related lease fees by lessees; and failed to monitor required maintenance of the cranes by lessees as specified in contracts; and sold a property for $4.1 million less than market value due to an accounting error. The audit also finds that The Port, lacking a risk assessment, paid $5.5 million for a property which was not ultimately used for a planned development project; allowed wide variances – of 20 to 70 percent – in lease rates for similar properties, with no explanation; and does not widely market its salable properties to get best bid competition. The audit found The Port also fails to obtain timely appraisals on many of its leased properties which would allow it to charge higher, market-rate lease fees.

Three of the Port of Seattle's 18 cargo cranes, seen from lower West Seattle Bridge, 12/3/10 - photo by Matt Rosenberg, Public Data Ferret

BACKGROUND: This state-led performance audit of the Port of Seattle was done under the authority of voter-approved Initiative 900. A previous state performance audit of The Port in 2006-2007 examined The Port’s construction project management, at Sea-Tac Airport. This audit examines the Port’s real estate management practices and other program areas.

KEY LINK: Port of Seattle: Real Estate Management And Selected Programs, Washington State Auditor’s Office, 12/13/10

KEY FINDINGS:

  • Between January 2006 and March 2009, various divisions of the Port of Seattle reported to Port Police 41 cases of property losses totalling $107,000 in value but that information was not also conveyed to Port executive management, internal auditors or – as required by state law – the state auditor. The losses included numerous items that went permanently missing while on Port property, including computers, copper wire, aluminum window frames, a pressure washer, drills, a projector, steel cables., copper pipes, handguns, blank security badges and digital cameras.
  • The Port leases its 18 cranes to private shipping operators, who use the cranes to handle cargo containers at Port terminal facilities. But contrary to recommended best practices, the Port does not seek to verify reported usage hours of the cranes by the customers/tenants, upon which lease payments by the operators to the Port are based. As a result, there is no protection against the possibility of under-reporting of crane usage hours and underpayments.
  • Crane lease agreements also require the tenants to pay for and perform regularly scheduled maintenance of the cranes and for The Port to inspect the cranes to verify the work has been done, and done properly. But no inspections of the cranes by The Port occurred in 2008 and only one in 2009.
  • The Port does not review crane maintenance records unless a mechanical problem arises, potentially putting crane durability and worker safety at risk.
  • Of the Port’s four major property transactions since 2004, two were well handled, under the current (new) administration and two (under the old administration) were not.
  • The Port in 2004 sold its Terminal 106E property for $4.1 million less than fair market value due, ultimately, to an accounting error – and also failed to market the property competitively to seek alternative (and better) bids from prospective buyers.
  • In April 2005, using an intermediary which was paid to $402,000 to hide The Port’s identity as a potential buyer, The Port bought for $5.5 million the 3.4-acre Tsubota Steel property without fully assessing or documenting the considerable risks, liabilities and costs of ongoing ownership of the property, which was slated for a larger development project including adjoining acreage, but which never materialized.
  • The State Auditor’s Office reviewed 21 of 244 leases overseen by The Port’s Seaport Real Estate Division and found that in some instances The Port’s property lease rates have been set at below fair market value and lacked documented justification. Rates for similar properties leased out by The Port to tenants have sometimes varied by between 20 percent and 70 percent, with no explanation.
  • The Port too often does not widely market its salable properties to promote competition. Lack of appraisals were also a concern for auditors. The Port’s Seaport division manages 45 leases but obtained only seven related property value appraisals from 2001 through 2009. Those appraisals indicated significant growth in market-value lease rates, from 14$ to $25 per square foot between 2001 and 2006, to between $28.50 to $32.50 per square foot in 2008 to 2009. This illustrates the need for “current market information specific to individual properties” leased by The Port, according to the state performance audit. Without that, “The Port is at risk of inconsistent rental lease rates that are less than fair market value.”

Lynnwood Is Hiring For Rehabbed Rec Center

by Matt Rosenberg November 30th, 2010

SUMMARY: Following city council approval last night of an authorization request, the Lynnwood parks and recreation department will be interviewing candidates in December and January for a wide range of positions to be filled at its newly renovated and expanded community recreation center. Two new positions are Aquatics Assistant Supervisor and Fitness Coordinator. A new position of .875 FTE Senior Lifeguard will also be filled, plus many part-time rec center staff openings. The $25.5 million project is funded through increases in taxes on the use of cable television, telephones, cell phones and pagers.

BACKGROUND: Lynnwood is a fast-growing city of 34,000 in Snohomish County, Wash. The Lynnwood Recreation Center closed in December 2009 for major renovation.

Construction and operations of Lynnwood's expanded rec center is funded by user fees, taxes, and borrowing

It is set to re-open in April, 2010 with twice as much swimming pool space and three times as much fitness space. Improvements will include new leisure and wellness pools, water slide, partially retractable pool roof, new fitness and weight room and group exercise space. The Department of Parks, Recreation and Cultural Arts has identified numerous positions to be filled in order to meet state safety requirements, develop and run programs, maintain 99.5 weekly open hours, and generate projected revenues to help fund the facility’s operation. According to a city fact sheet, the renovation and expansion project will cost $25.5 million and will be paid for through a 3% hike in the city’s utility tax on use of phones, cell phones and pagers and a new 1% cable television utility tax, both effective 1/1/09. Permanent financing of the facility’s operations is to be paid for through city borrowing, via 20-25 year general obligation bonds purchased by investors, and through user fees and a solid waste utility tax effective 1/1/10. However, increased property taxes and a business licensing tax – discussed in a mayoral budget memo to the council, were among the new revenue measures approved by the council last night and may result in alterations to the rec center’s long finance plan.

KEY LINK: Recruitment Authorization: Recreation Center Staff, City Council action item approved 11/29/10.

KEY PROVISIONS:

  • The Lynnwood City Council is asked to authorize recruitment for aquatics, fitness and customer service positions at its expanded city Recreation Center which is to re-open in April.
  • New full-time positions to be filled are Aquatics Assistant Supervisor and Fitness Coordinator.
  • A .875 FTE position to be filled is Senior Lifeguard.
  • Numerous part time positions to be filled are for lifeguards, swim instructors, recreation specialists, weight room attendant and customer service clerks.
  • Interviews will occur in December and January, hiring in January, training in February, soft opening of the rec center in mid-March, and opening in April.

RELATED:

Recreation Center Renovation and Expansion Project site, City of Lynnwood.

Lakewood, Wash. Lodging Tax Expenditures, 2011

by Matt Rosenberg November 24th, 2010

SUMMARY: City staff is recommending Lakewood dispense $394,330 in hotel lodging tax grants to 13 recipients. The largest would be the annual $101,850 grant (to be given for 20 years) for construction of the Sharon McGavick Student/Conference Center at Clover Park Technical College, in Lakewood. The next largest grants recommended are for $65,000 to the Lakewood Chamber of Commerce, $48,000 to Lakewold Gardens, and $35,000 to the Tacoma Regional Convention and Visitor’s Bureau.

BACKGROUND: Lakewood is a city of approximately 60,000 residents in Pierce County, Wash. The city deposits into a special Hotel Tax Fund its share of sales tax revenues collected on overnight stays at commercial establishments in the city.

Lakewold Gardens is slated for a $48,000 2011 lodging tax grant from the city

These “lodging tax” revenues and can be used only for promotion of tourism, cultural activities, and for tourism facilities within Lakewood. The city’s Lodging Tax Advisory committee- composed of representatives from hotels and motels,and cultural and business organizations, reviewed 13 proposals submitted by potential grant recipients and issued the following funding recommendations. The next step will be for the city manager to request authorization from the city council to execute contracts with the recipients so that the grants can be made.

KEY LINK: City of Lakewood staff memo, 2011 Lodging Tax Grant Recommendations, memo to City Council from Economic Development Manager Ellie Chambers-Grady, 11/22/10

KEY FINDINGS: City of Lakewood staff recommendations for hotel lodging tax grants for 2011 are in the following table from the memo.

Wenatchee Public Facilities District’s Underperforming Asset

by Matt Rosenberg November 16th, 2010

SUMMARY: An indoor arena in Wenatchee, Wash. owned by an intergovernmental agency is unable to generate sufficient revenues to cover its combined operating expenses and debt service obligations, and the agency needs to devise a new plan to make the facility solvent, according to a new report from the Washington State Auditor’s Office.

BACKGROUND: The Wenatchee Regional Public Facilities District was formed in 2006 through an inter-local agreement between Chelan and Douglas counties, and seven cities including Wenatchee. Core duties were to finance, oversee construction and assure the financial feasibility of Town Toyota Center. Originally named the Greater Wenatchee Regional Entertainment Center, the facility was completed in fall of 2008.

Town Toyota Center

Supporters said it was needed to boost the area’s competitiveness in the convention industry and to replace aging ice arenas; that it would break even at worst; and no new taxes would be required after completion. It is home to a junior league hockey team, the Wenatchee Wild, and the Wenatchee Valley Venom of the Indoor Football league.

The 4,300-seat facility is also used for ice skating, curling, trade shows and other events. Since the recession hit, sales tax revenues have declined. Bookings have been low, compared to comparable facilities in the state. These factors have contributed to the facility’s fiscal problems. If the seven towns and two counties each formally consent by Dec. 23, 2010, then a City of Wenatchee proposal for a .1 percent sales tax hike to halve the city’s annual debt obligation for Town Toyota Center could go to district voters in February 2011.

KEY LINK: Washington State Auditor, Financial Statements Audit Report, Greater Wenatchee Regional Events Center Public Facilities District, (Town Toyota Center), 11/15/10.

KEY FINDINGS

  • The period covered in the audit is 1/1/09 to 12/31/09, although the district reports in the audit that financial problems identified through that period have persisted into 2010.
  • The audit found that the district lacks sufficient financial resources to fund current operations and long-term debt. The district’s operating losses were $1.6 million in 2008 and $2.5 million in 2009.
  • The district has long-term debt of $42 million via three bond anticipation notes which require annual interest payments of $2.19 million until they mature in December of 2011, but the district is positioned to pay only $580,000 per year, using sales tax revenues. The City of Wenatchee has agreed to lend the district funds to pay the remaining bond interest due.
  • The District signed a contract in September 2006 with Global Entertainment Corporation for management and marketing services. “Global projected revenues to be significantly higher than the district actually generated, resulting in insufficient funds to cover both operating expenses and debt obligations.”
  • The State Auditor’s Office recommends that the district establish a detailed written plan to address cash flow challenges. The plan should be approved by the district’s board and actual results carefully monitored.
  • The District’s reply to the state auditor, in the audit, notes that the district terminated Global’s contract in September 2009 and hired its own general manager. Financial results for 2010 will be improved from 2009 but still short of amounts needed to cover debt service obligations, according to the district. The district and city are reviewing options and will deliberate and approve a plan in open public meetings of the district’s board. Approved plans will be stated in writing and monitored.

RELATED:

Independence, Global Part Ways Over Events Center,” Independence (Mo.) Examiner, 10/23/10.

Wenatchee Cuts Arena Tax Request,” Wenatchee World, 10/1/10

The Perfect Storm Hits Toyota Town Center,” Wenatchee Mayor Dennis Johnson, Wenatchee World, 8/17/10

Memorandum to Dennis Johnson, Mayor, (and) City Council Members From City Staff on minimizing city General Fund outlays for events facilities and visitor marketing, 5/3/10

City Of Redmond: 2011 State Legislative Agenda

by Matt Rosenberg November 16th, 2010

SUMMARY: The Redmond, Wash. City Council on Nov. 16, 2010 was scheduled to vote on adoption of its 2011 state legislative agenda. The agenda emphasizes funding for transportation and other infrastructure projects, and continued efforts to manage regional growth. The city’s state agenda also voices support for electronic (time-variable) tolling of the I-90 bridge across Lake Washington, as well as for the replacement bridge across the lake on State Route 520, in order to minimize traffic diversions and improve regional traffic demand management.