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Published on Friday, November 9, 2012

How will cities be funded in the future?

Over the past several years, it has become increasingly obvious that the current method of funding city services is fundamentally broken. Many or most of the available city revenue options are either:

  • Constricted (examples being the property tax cap at 101% of current value, the lack of flexibility with REET, and the 6% cap on some of the major utility taxes);
  • Unpredictable (such as the volatility of sales tax collections based in part on consumer confidence, on new construction, and on employment levels); or
  • Subject to approval by other political bodies (such as state-shared revenues and federal funds).

At the same time, recent census data shows that at the current rate of growth, the State of Washington’s population will increase by roughly one million citizens over the next 10 years – much of this new population will live in our cities. City services will need to be provided to a growing population with revenue streams that are generally not keeping pace. It is clear that as a result of this growing city population and the economic recession, the delivery of some governmental services will be changed forever.

We’ve previously written about two committees that are considering the current ways cities are funded and whether there are new or better options. These committees provide an opportunity to be proactive in the discussion about how all levels of government will evolve and adjust as our economy moves forward. Now is the time to take a step back and be thoughtful about how we can help cities to be successful in the future.

AWC’s Ad Hoc Committee on Municipal Finance

Earlier this year, AWC invited a combination of city officials – including elected officials, city managers, finance directors, and intergovernmental staff – to identify revenue options that we can pursue over the next few years. To set the stage for their work, the committee met in October and heard from experts in municipal finance and current trends. We’d like to thank Mike Bailey from the City of Redmond, Rick Peterson from the Washington State Treasurer’s Office, and Alice Ostdiek from Foster Pepper for their outstanding presentations, along with Anne Pflug who facilitated the meeting. This week, the committee is meeting again to brainstorm city revenue options that would improve service delivery in our cities.

Legislative Joint Select Committee on junior taxing districts, municipal corporations & local government finance

Cities were invited to speak about the impacts of liquor privatization at the Joint Select Committee’s November 1 meeting. AWC’s Victoria Lincoln led the presentation with a discussion of the relationships between liquor funding and public safety, the direct impacts of alcohol consumption on cities, and preliminary negative impacts of liquor privatization. Ronnie Roberts, Police Chief from the City of Olympia, then shared some specific liquor issues his city has been battling. To see AWC’s full message to the committee, click here. We will continue to engage with this committee and keep you posted on their work.