Hot Kennewick council debate on 1% tax hike hints at budget woes
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- Kennewick council rejected a 1% property levy increase that would raise $158,000.
- City manager warns reserves will deplete and a $10 million biennium shortfall looms.
- Council approved uniform $1.30 per $1,000 rate and debated cuts, asset sales.
Kennewick City Council voted down proposals this week to increase its property tax levy by 1% in 2026 or to bank the capacity for a rainy day.
The increase — which pencils out to an extra $25 a year on a home valued at $400,000 — would have raised an extra $158,000 for the city next year.
“I don’t see the need for it,” said Councilman Brad Beauchamp.
“I don’t see the hole that we’ll fill for $158,000. We don’t have something that’s spilling over the top that needs fixed for $158,000, that’s my opinion,” he continued.
Beauchamp said the levy increase is miniscule compared to a $26 million mid-biennium budget adjustment the city council also passed at that meeting. That included new grant revenues and expenditures.
But this levy increase is baked into the city’s current 2025-26 biennium budget and would have benefited rising outside agency costs the city has limited control over, such as jail services and district court costs.
The city of 84,000 is operating on a $550 million budget for 2025 and 2026. Next year’s total levy will be nearly $16 million.
A benefit of those small levy increases is that they compound over time to millions of dollars in revenue, said City Manager Erin Erdman.
“Our costs are already outpacing what we’re bringing in, so we’re dipping into our reserve funds to do that. Without continuing to increase our revenue options, that reserve fund is going to continue to deplete, and now we’re looking at cost cuts. Property tax is the only real option we have to keep up with inflation, and that is restricted to that 1%,” Erdman said.
A retreat with city council and staff will need to be held early next year to align the council’s priorities with the budget, and to assess biennium revenues and expenses, said Erdman. An adjustment after that is likely.
But turning down that levy increase could worsen Kennewick’s already bleak budget reality. Erdman estimates the city could have a $10 million budget shortfall on its hands next biennium, given current revenue trends and financial forecasts. Slicing planned increases would widen that gap.
Council weighs increase
Council members told staff Tuesday night that they would have preferred to workshop the proposal before bringing it forward to a vote.
Some were confused with how banking the increase would work, while others said they were outright opposed to an increase because of the impact to taxpayers’ pocketbooks.
The city council has approved increases to various taxes and fees over the last year.
Its sales tax rose slightly in January to pay for road improvements, and garbage fees are expected to jump 40-70% next year for most residential customers. The city’s utility bill fee funding ambulance rides will also increase over the next five years to keep up with demand.
Council last year even approved a 1% increase to its 2025 property tax that levied an additional $155,000.
While the property tax increase is relatively miniscule compared to other recent hikes, the council appeared concerned with the principle of rubber-stamping tax increases without weighing the impacts.
“This is not a huge amount for the budget, and I don’t want to fall behind. But again, at some point in time, I do get concerned that we have to somewhere draw the line a little bit,” said Mayor Gretl Crawford, adding that the city needs to educate citizens about tax exemptions and how property taxes work.
Councilman Loren Anderson said the principle of his issue with the increase is tied to the state’s eagerness to increase taxes at the drop of a hat.
“While I absolutely support our city services — everyone loves clean water and safe streets, and so forth — I think we’ve got to break this obsession with constant increases all the time,” said Anderson, calling the levy a nebulous “existence tax.”
The council voted down the increase, 5-2.
Councilmen John Trumbo and Jason McShane, as well as Beauchamp, Anderson and Crawford, voted against it. Councilmen Jim Millbauer and Chuck Torelli voted in favor.
City staff worked rigorously for about 20 minutes to draft a new ordinance for the council to consider a bank, but even that failed in 4-3 fashion.
Crawford, Torelli and McShane were in favor of the bank, but Anderson, Millbauer, Beauchamp and Trumbo tanked the proposal.
At the end of the meeting, the council instead passed a plan to collect the same $1.30 on every $1,000 of assessed value. The cost of that levy adds up to about $520 annually on a home valued at $400,000.
Some support budget cuts
Council members also had some creative ideas to save the city $158,000. Beauchamp said the city could sell off some of its low-traffic public parks, while Trumbo mentioned the city should cut health care premiums the city pays for its council members.
“We must take care of the citizens,” Trumbo said.
Torelli says most of the city’s salary expenditures go to firefighters and police. He lauded their work, and says he was in favor of the increase in order to keep city services functional and to ensure the city grows in a healthy way.
“We took the biggest cuts back in 2008, lost 30 bodies, and never really recovered from that,” he said.
“Every department is operating short. We have done an outstanding job, our city staff. But it’s not free — nothing’s free. Now, if we want to cut this we can. But I’d like to know what do we cut — tell me what service, what person, what responsibility do we not want to take care of,” Torelli continued.
County data estimates Kennewick’s assessed value will increase by about $551 million next year for a total $12.7 billion. About half of that increase is from new construction values.
