At this time last year, the Liberty Lake City Council was in the process of organizing a budget without a finance director while fielding complaints about potential cuts to the municipal library and golf course. Then there was the matter of a projected $700,000 deficit and the installation of the city’s first-ever utility tax.
This year, Liberty Lake has finance director in place – R.J. Stevenson – and a different dilemma: How, or if, to spend a considerable surplus in the general budget.
At the Nov. 15 City Council meeting, Stevenson presented the governing board with a list of options for paying off several of Liberty Lake’s debt obligations. Thanks to a windfall of revenue from the 6-percent utility tax on electric, phone, cable and gas services, plus improved numbers from sales tax (up 14.5 percent from projections for 2011), the city has an ending fund balance in the neighborhood of $2.8 million.
At the same meeting, the council also discussed a potential cut in the utility tax for 2012. Mayor Wendy Van Orman’s preliminary budget included a recommendation to reduce the rate to 3 percent.
Council Member Judi Owens brought up a concern with the impact of the utility tax on Liberty Lake businesses, an issue that has been the talk of a task force organized by the Greater Spokane Valley Chamber of Commerce and comprised of local businesses. Mayor Dave Crump said he has had several citizens ask him “ specifically what revenue from the utility tax is specifically utilized for.”
Ultimately, the governing board decided that both the utility tax adjustment and the debt payment debate warranted further discussion and postponed any decision until its next meeting on Dec. 4.
“I’d like to see the entire thing tabled and brought to a workshop,” said Council Member Odin Langford who expressed concern that individual topics like debt obligations and the utility tax were not being discussed “in a larger context.”
During the conversation over the city’s capital debt, Stevenson described how the municipal golf course, Trailhead at Liberty Lake, features a higher interest rate – 5.33 percent – than the bond on a plot of land near the site of the old City Hall that has also been considered for debt retirement. The 6.4-acre site was purchased in 2004 and was at one time slated as the future location of city hall and community center.
While the golf course has a more substantial interest rate – paying off the $1.5 million debt now would save the city $188,000 over the long haul – Stevenson pointed out that retiring the balance on the 6.4-acre property would represent a $161,000 savings in the general budget for 2012. In contrast, closing out the golf course bond would reduce the operating budget by only $63,000.
At one point, Langford lobbied “to maintain a health bank account,” while questioning why the city was in such a hurry to spend the surplus. Stevenson said interest rates for municipal funds continue to garner discouragingly low interest rates.
Crump, who serves on the city’s finance committee with Council Members Josh Beckett and Ryan Romney, said that while he stands by decisions to purchase land and buildings (the city has bought and renovated property for City Hall, the police department and municipal library over the past several years) it was time “to pay off debt in a fiscal manner that would be wise and free up general fund dollars.”
During the public hearing on the budget Nov. 14, Mayor-elect Steve Peterson said the city should look ahead to infrastructure improvements when mapping out its expenditure schedule for 2012. Peterson referred to Liberty Lake Road as one arterial in the city that would benefit from the same refurbishing that took place on nearby thoroughfares like Harvard and Molter.
“I’m not against paying off debt, but you have to make sure and address infrastructure needs in the community,” Peterson said. “The issue is to ensure that the community priorities are met.”