by Matt Rosenberg December 5th, 2011
It now appears that the state of Washington’s struggle to narrow a $2 billion gap between planned expenditures and revenues in the 2011-13 budget could affect the timing of a major annexation vote in Renton. The Renton City Council is expected to decide Monday night whether to delay until November 2012 a planned February public vote on annexation to the city of about 14,000 residents and 5,600 dwelling units in the eight neighborhoods of West Hills, more commonly known as Skyway.
According to a City of Renton staff memo and the council legislation awaiting a vote Monday, Gov. Christine Gregoire’s 2012 supplemental budget proposes elimination of a state sales tax credit which allows certain cities to take a 0.2 percent slice of existing sales taxes collected within their entire boundaries and use the credited revenues to help offset the cost of providing municipal services to newly annexed residents. In the memo, Alex Pietsch of the city’s Community and Economic Development Department says even with the credit in place, Renton was still facing an annual gap of $2 million between new revenues and added costs from annexing West Hills, and that the credit’s elimination would more than double that gap. He adds that although state legislators from the area have pledged they’ll seek to preserve the annexation tax credit, the outcome won’t be known by the planned election date of February 14. So postponing until November – after the close of the 2012 legislative session – the public vote on adding West Hills to the city, makes more sense because the fiscal implications will be clearer then.
While the annexation sales tax credit is certainly up in the air, it may not be eliminated entirely and one city official elsewhere in King County says there’s a move afoot to retain it. Cries of protest ensued after the release in late October by the state’s Office of Financial Management of a summary of local revenue sharing cuts being considered indicated Gregoire had already decided to end the annexation sales tax credit by May 1 at a savings to the state of $13.5 million in 2012. The credit is written into state law to benefit seven cities in King, Snohomish and Pierce counties.
But the planned move struck a loud, sour note in cities which had already completed major annexations of neglected unincorporated areas and had been counting on revenues from the credit to help close their own resulting budget gaps. Some of the vocal reaction was reported by B-Town blog in Burien and reflected in an editorial in Kirkland Views. By November 22, a State Senate Ways and Means Committee summary of the governor’s budget cuts was describing her envisioned rollback of the state’s annexation sales tax credit as only 10 percent in 2012, saving just $1.4 million in the new year. Further underscoring the pushback, White Center Now recently quoted Burien City Manager Mike Martin as saying cities are strongly lobbying legislators and looking for a way to retain the credit.
So while it may be a stretch to say the tax credit is firmly targeted for elimination, its future is still uncertain, prompting the proposed delay in the public vote on annexation of West Hills to Renton. According to the city, not only would there be a revenue gap of between $2 million to $4 million-plus per year, depending on the extent to which the tax credit is retained, but pressing capital construction work needs will add to the West Hills annexation bill in either case. A city backgrounder says:
There is also an additional annual capital gap of approximately $4-5 million. The West Hill/Skyway area faces severely neglected infrastructure, significant housing and human services needs, serious crime, and social and public health challenges that require many resources to address – more than any single organization has been able to provide. Renton is exploring extensive intergovernmental and private and non-profit partnerships to help transform this area, state and federal appropriations requests to help revitalize the Renton Avenue South corridor and address severely deficient storm water and drainage systems in the area….The City’s policy stance has been to welcome areas that wish to annex but at the same time Renton must maintain service levels to current residents. Annexation is ultimately a choice of area voters. The City’s role will be to continue to provide information, work to identify the resources needed to consider annexation, and secure resources to help make large annexations financially viable long-term.
As a 2010 City of Kirkland staff memo explains, the original 2006 state law allowed the sales tax credit in qualifying cities for annexations begun by January 1, 2010, but 2009 legislation extended that deadline to January 1, 2015.