Yakima floats $7.2M tax hike as budget hole widens and Band-Aids run out
(The Center Square) – The city of Yakima may ask voters to raise taxes by $7.2 million this fall as local officials also consider $1.8 million in cuts to balance a $9 million deficit ahead of 2026.
The Yakima City Council faced a similar challenge last year, balancing a significant deficit last December to guide spending through 2026. The council relied on reserves and American Rescue Plan Act, or ARPA, funding to make it happen, but now say it’s time to correct the course.
Cities and counties across the country balanced deficits last year and face new challenges this year due to a reliance on federal COVID-19 relief funding. The APRA dollars are shoring up as costs rise and inflation continues, leaving the city’s agriculture-driven economy biting its nails.
“It was like we were just putting a Band-Aid on,” Councilmember Janice Deccio said on Monday. “You know, flipping along, putting a band-aid on, and now we don’t have any more band-aids.”
The council held a budget meeting with City Manager Vicki Baker and Craig Warner, director of Finance and Budget, to determine how they plan to pull the city out of this. Several options are on the table, but it will likely come to raising property taxes and user fees while cutting services.
According to the presentation, staff thinks other options, such as a utility tax increase, impact fees and sales tax hikes, could harm economic development and take too long to raise revenue.
If the city wants to raise taxes, it will require voter approval outside of the 1% annual property tax increase allowed by state law. The deadline to submit a proposal for the November election is Aug. 5, so the council will decide by early July to allow time for staff to draft a ballot resolution.
The council may ask to raise taxes under a single all-encompassing levy lid lift or propose two levies to raise money for public safety and parks and recreation. Running two levies would cost someone with a property valued at $356,000 about another $213 annually, or $17.80 per month.
Opting for the all-encompassing levy would cost the same property owner about $263 annually.
“It’s going to be a hard sell,” Mayor Patricia Byers said. “I think that most everyone would agree to public safety, but then they would have to agree to a second levy to [address] quality of life.”
U.S. Census data shows roughly 17% of Yakima residents live in poverty, outpacing the state at 10.3% and the nation at 11.1%. Meanwhile, only about 53.5% of the community owns the home they live in, so property owners will likely pass on the cost of the tax increases to their renters.
Councilmember Rick Glenn ias skeptical about raising taxes, as the median household income is only about $59,000 annually compared to nearly $95,000 when looking at the state as a whole.
Glenn thinks the only way to steer the ship forward is to focus on economic development, but his peers worry that without a levy, people won’t want to move to the city or do business there.
The last part of the solution includes adjusting user fees to make some services self-sufficient and reigning in the budget. Another $1.8 million in cuts could round out the delta by eliminating lobbying and travel funding, a clean city program, some economic development staff and more.
“We need to get more people employed at better paying jobs, and if we can figure out a way to do that, that will solve some of these issues that we’re looking at,” Glenn said, “but just raising taxes to get more money on the same — that’s kind of a losing proposition in my mind.”
