Should city officials consider a sales tax increase to tackle affordable housing?
Port Angeles City Council member Mike French said the idea is worth a “hard look” given a new tax credit offered to cities and counties that lack affordable and supportive housing.
“This would be a sales tax increase that would pair with a sales tax credit from the state,” French said during a City Council think tank last week.
“It’s possibly an uncomfortable topic, but I think it’s something we should take a hard look at.”
House Bill 1406, which was co-sponsored by state Reps. Mike Chapman, D-Port Angeles and Steve Tharinger, D-Port Townsend and signed into law May 9, encourages “investments in affordable and supportive housing.”
It provides cities and counties that adopt qualifying local taxes with matching state sales tax revenue to be used on affordable housing initiatives.
One qualifying tax would be a maximum one-tenth of 1 percent sales tax increase authorized under Revised Code of Washington (RCW) Section 82.14.530, French said.
If the council decided to put such a tax on the ballot — and voters approved it — the city would create an affordable housing fund and receive an additional 0.0146 percent in state sales tax revenue, French said.
The 0.1-percent tax increase would raise about $320,000 per year. The 0.0146-percent match would generate about $55,000 annually, French said.
The current sales tax rate in Port Angeles is 8.7 percent.
Council member Lindsey Schromen-Wawrin said the city should take advantage of the tax credit.
“Not having affordable housing is hurting our economy and this is a way, a time-sensitive way, for us to take action on it,” Schromen-Wawrin said.
The City Council took no action on the idea in its July 2 think tank.
Council member Cherie Kidd said a proposal to raise taxes would require “a lot of explanation.”
Think tanks were implemented by the council to encourage a free exchange of ideas.
Four or more council members cannot discuss policy or meet privately under the state Open Public Meetings Act.
French floated the idea to pursue the sales tax/tax credit after attending a Association of Washington Cities conference with Schromen-Wawrin, Mayor Sissi Bruch and Port Angeles City Manager Nathan West.
“We are not the only city that is facing the housing crunch,” Bruch said at the think tank.
“The state is very aware of the need out there for housing. So they are willing to work with cities and counties to try to get us some funding so we can do something for the housing.”
In a public comment period that preceded the discussion, Peninsula Housing Authority Executive Director Kay Kassinger urged the council to consider House Bill 1406 as a tool to help address the housing shortage.
The 20-year tax credit can be used to finance loans or grants to nonprofits or housing authorities to acquire, build or rehabilitate housing or to pay for rental assistance, Kassinger said.
“We’ve all been looking and talking about how we can affect the affordable housing issues and increase the stock here in Port Angeles, and this legislation provides the city with a new financial tool in this quest for additional affordable housing,” Kassinger said.
“It’s got to be a public-private partnership,” she added, “because we as an agency cannot build out of this problem.”
French said there were multiple presentations on House Bill 1406 at the June 25-28 conference in Spokane.
The idea behind the legislation was to allow cities and counties to “take the lead” on their own housing challenges, he said.
“It’s a great tool for local governments to spend our money in a way that’s tailored to our communities’ needs,” French said.
French added that the sales tax/tax credit would be more palatable than raising property taxes.
“The tourists would be helping to pay for the growing pains of our tourism industry,” French said.
“That seems more fair to me than a property tax.”
Kidd suggested that the city work with state officials to lift onerous regulations that dissuade builders from creating more housing stock.
“We’re getting down to ‘If you build an outhouse, what is your stormwater treatment plan?’ ” Kidd said.
“It’s just gotten so over-regulated within the city.”
Council member Jim Moran agreed, saying the state Department of Ecology considers a gravel driveway as a non-permeable surface, which requires costly stormwater mitigation.
“This is a multi-faceted question,” Moran said of the affordable housing issue.
“Whereas I agree with the option of getting some more state money — and I have no problem, Mike, with that one-tenth of 1-percent sales tax — I also would like us to pursue aggressively administrative relief in certain areas, specifically stormwater.”
French concluded his pitch by saying a sales tax increase would require a vote of the people.
“Do our citizens view this issue as salient?” French asked.
“Or do they think that this is something that they want their government to engage in?
“They might say no,” French added.
“And that’s fine. If they say no, then they’ve told us what they think.”
Source: Daily News
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