There is no question that it is not just state government that is hurting in the wake of the Great Recession. City budgets face tough times too. But how city leaders choose to react to tough times shows their understanding of priorities. That is why today's late news that the city of Lynnwood decided to increase several taxes is disappointing.
The Seattle Times delivers the details, and while city residents' property taxes will increase by 11% next year -- about $95 for a family in a $250,000 house -- their utility bills will increase about $50 a year and they will also have to pay an extra $20 per licensed vehicle. But the whopper, in my opinion, is this:
"The council also approved an increase in the city's business-license fee from $15 per employee to $85, over the objections of the local business community."
That is not a misprint. That is a 567% increase in the city's employee head tax.
These tax increases are to save approximately 102 city jobs. But even with the tax increases, Council President Mark Smith admitted that 25 city jobs would still have to be eliminated as the city is facing a $10 million budget shortfall. There are plenty of concerns with increasing property and utility taxes, and Lynwood residents already pay a 9.5% sales tax rate. But my main concern is for the increase in business costs without a suitable return.
In essence, businesses are paying more but for what? And, in case Council members haven't noticed, not only is this not the best time to raise taxes on the business community, but voters earlier this month implemented a 2/3 majority requirement for increases in state taxes and rejected a handful of taxes passed by the legislature earlier this year. That is why Smith's assertion that the message he's received from his constituents that they are ok with tax hikes rings somewhat hollow.
Late last year the city of Seattle wisely decided to ditch its infamous $25 per employee head tax. The Council decided that businesses were already having a tough enough time surviving and that there was little nexus between the tax and what the tax was funding (transportation infrastructure). It is unfortunate the City of Lynnwood has decided to go in the opposite direction.