The SnoValley Chamber of Commerce State of the Cities Luncheon last week also featured Snoqualmie Mayor Matt Larson’s 16th annual “State of the City” address. Larson’s address had a decidedly somber tone as he talked about major issues facing the City of Snoqualmie in the past year of 2020 and for the next two or three years.
Larson stated because of the Eyman 2001 initiative that “requires state and local governments to limit property tax levy increases to 1% per year unless an increase greater than this limit is approved by the voters at an election.” The City of Snoqualmie experiences a 3% inflationary increase and needs up to $240,000 of new money each year to “keep the lights on” or sustain the services that residents enjoy.
On top of that challenge, the last quarter of 2019, there was the loss of the Salish expansion, the I-976 initiative, loss of car-tab fee funding, the City Council’s decision not to take the 1% property tax increases, staff collective bargaining agreements regarding cost-of-living adjustments for 2021 (union raises) and $700,000 in Covid resulting in a total loss of $2,070,000 for the city of Snoqualmie.
Detailing those Covid deficits, Larson explained that some were Sales and B&O tax losses, and others were the loss of Lodging and Utility tax revenue, with the utility tax loss accounting for half a million of the $700,000 in losses. Surprisingly, a Real Estate Excise Tax (REET) tax loss was expected but not realized and had a 20% gain because of a booming real estate market.
Larson explained how the city looked to solve the debt, including economic development, a Levy Lid Lift or city service cuts saying the first two weren’t feasible or palatable during Covid leaving only service cuts as a viable option.
On the positive side, some revenue was restored, or new revenue was found for a gain of $1,130,000, reducing the city’s debt by about half. However, Snoqualmie still has a nearly one-million-dollar river of red gap to bridge. The city is tasked with finding a way to hang on until things improve without resorting to a levy lift lid or pursuing economic development in 2021.
The first thing looked at, according to Larson, was the city’s rainy-day reserves. This money is put aside for precisely this scenario, but their dilemma is not knowing how long recovery will take. If recovery is short, it would be ok to use this money, but if it is long, the money would just be burned up before any recovery even takes place.
The City and Council also considered a hybrid approach using 50% rainy day reserves and 50% temporary cost cuts such as a temporary hiring freeze and cutting services such as travel, events and training. Such things can easily be reversed when things start getting back to normal. According to the Mayor, these measures are all about buying time until stability returns and some of the normal ways of finding revenue can be considered.
Alternately the American Rescue Plan Act of 2021 is another way to bridge the debt gap. The City of Snoqualmie is entitled to close to 3 million dollars under this plan which could help for the next two or three years. At this point, the earlier measures mentioned could be used if necessary, depending on where the recovery stands.
Now that the bridge has been built to get through these current tough times, Larson wanted everyone to know the challenge now facing the council administration for the next two years will be to find new revenue to build a landing and fill that million-dollar gap.
In November, there will be a voted .2% Transportation Benefit District (TBD) sales tax that eliminates the $20 car-tab fee and replaces it with a sales tax. The benefit here, according to Larson, would be that tourists would be paying for road improvements as well as Snoqualmie residents.
He continued to say that the Mill Site Development will contribute some funds, and in 2022 the administration is looking to do a voted property tax increase and other miscellaneous development. There was hope in a developer interested in putting several drive-thru restaurant establishments, but unfortunately, after a few months of discussion, the project collapsed at the end of March again due to Covid concerns.
When asked by Chamber President Earl Bell how the city was planning on getting people to town to increase the proposed sales tax revenue, Larson listed partnering with the Railway museum to help make it a world premiere facility, a river boardwalk in the downtown, winery tourism a kind of Woodinville centric development of the Mill Site.
All of this is focused on giving people places to go and things to do. Especially the two million people who come out to the falls each year. Said Larson, “There is no better revenue than a tourist revenue. They leave money in town, and then they go. They don’t demand schools, more parks, all the other services-fire and police-that goes with that. So, it’s great revenue to go after.”
If you would like to hear Mayor Larson’s or Mayor McFarland’s address in its entirety, please click HERE to watch the video on the SnoValley Chamber of Commerce Facebook page.