Balance Vancouver’s budget without raising property taxes
Now, keep in mind this is a blog. This is where we put funny anecdotes and sock puppet videos and other bits of information that amuse us but don’t belong in the “news” section of the newspaper. I’m simply sharing information. I don’t believe there is even the slightest chance that this will ever happen.
This week I wrote about the city’s structural deficit and how, even if the city council enacts the maximum 1 percent property tax levy every year and raises utility rates, Vancouver is projected to have a $10 million deficit by 2020. Simply put, revenues can’t keep up with costs that increase every year from inflation and a growing population. (And, in one of the worst cases of timing I’ve ever seen, the council deciding to give the city manager a $30,000 raise. What, you couldn’t have laid off a few employees first?)
In Washington, there’s no income tax, so governments rely heavily on property taxes (that were reigned in years ago) and sales tax. But, as you read in every article about why Vancouver is such a great place to live, we can skip the sales tax and shop in Oregon. Vancouver has always suffered from a loss of retail sales tax revenue, but by limiting how much the property tax levy can be raised every year the loss of sales tax has hurt a lot more.
As City Manager Eric Holmes told the council on Monday, each time the council raises the property tax levy, it brings in approximately $400,000 extra for the city’s $175 million general, street and fire funds.
I asked Natasha Ramras, the city’s deputy finance director, how much sales tax revenue the city misses out on every year because people shop in Oregon.
Ramras: “Approximately $9.6 million is lost annually to Vancouver residents shopping in Oregon. (The estimate is based on the average 2013 retail sales per person in the largest 20 cities in the state of Washington compared to the same data for Vancouver for 2013).”
I also asked if people stopped shopping in Oregon, would that be enough to erase the city’s structural deficit.
Ramras: “It is highly likely that if the sales occurred in the City of Vancouver, the amount of revenue generated would have been more than sufficient to cover the projected deficit through 2020. (Sales tax revenue is estimated to grow by approximately 3% annually between 2015 and 2020, while the estimate above is based on 2013 data).”
Finally, I asked Ramras how much the city estimates a family saves by shopping in Oregon. Keep in mind a typical Vancouver household pays $45 a month in property taxes to the city, or $540 a year (and if this fact doesn’t seem accurate, then remember only about 22 percent of your total property tax bill goes to the city of Vancouver.)
Ramras: “If we calculate sales tax on the “forgone per capita retail sales” for Vancouver, compared to the average per capita for the largest 20 cities in Washington, the tax saved is estimated at $580.7 annually and $48.39 monthly.”
So yes, Vancouver’s budget woes would be solved if people gave up shopping south of the Columbia River.
What do you think, Statler and Waldorf?