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Transportation Benefit Fund put on the back burner
For anyone worried about a sales tax increase coming to Sequim, relax. It's a long, long time away.
As the city searches for ways to increase its revenue, a dominant proposal has been the creation of a Transportation Benefit Fund.
TBDs are citywide and can take different forms, from license renewal fees to a sales tax increase. In some cases - such as a $20 motor vehicle license renewal fee - a TBD would affect only Sequim residents and business owners. Others, such as a sales tax increase, would affect anyone shopping in Sequim's city limits regardless of where they live.
The consulting firm Gary & Osborne recommended the city establish a two-tenths of 1 percent sales tax increase earlier this month. Were the proposed increase adopted, Sequim's sales tax would jump from 8.4 to 8.6 percent and, according to Gray & Osborne, bring in an estimated $600,000 a year.
Increasing Sequim's sales tax would require putting the proposition on a ballot for city residents to vote on.
"Sequim would be the first municipality to do it on their own," said Ken Enns, a principal with Gray & Osborne. "Most municipalities are waiting for what the counties will do."
According to Enns, Sequim might see the county looking into raising license renewal fees in the near future.
The proposed sales tax increase sits well with Councilwoman Susan Lorenzen, who brought the item up for council discussion during its May 27 meeting. Lorenzen said creating a Transportation Benefit District, particularly through a sales tax increase, is the fairest option for generating city revenue because it affects not only Sequim residents but those who come into Sequim to shop and impact Sequim's roads. Lorenzen also said the sales tax is fair because it has a greater impact on men and women with higher incomes, those who can better afford it.
"People who could afford it the least would be paying the least," Lorenzen said.
According to Lorenzen, the new increase would mean 20 cents more for every $100 purchase.
Lorenzen said that she is in favor of approving the proposal immediately so that Sequim residents could vote on it during the November election. To add the proposal to November's election would cost the city $5,000, which is cheaper than waiting until the spring 2009 election.
"It's a bargain discount if it's on the November election," city attorney Craig Ritchie said.
The majority of the council, however, disagreed with placing it on the November ballot because there is not enough time to properly educate the public.
"We would have to finance an aggressive campaign," Councilman Paul McHugh said, concerned that any talk of increased taxes likely would be voted down. "It's not going to be an easy thing to pass."
As one audience member at the May 27 meeting pointed out, "They would just vote it down! Get it done!"
The council agreed to pick up the discussion concerning a possible Transportation Benefit District at a later date. Councilman Walt Schubert, however, made it clear he's staunchly opposed to the proposal.
"It would put city of Sequim businesses at a huge disadvantage," Schubert said, adding that it would drive consumers to shop elsewhere.