With annexation, Kirkland is on the verge of a momentous decision that may change its character forever. We believe it will affirm what has existed unofficially for a long time - that those who have considered themselves living in Kirkland will become officially part of the family. But we have to ask: Are we willing to pay the price to bring the rest of the family into the fold?
Significant business, property and utility taxes are being proposed. While residents in the areas of Finn Hill, North Juanita and Kingsgate get to vote on annexation, current Kirkland residents and businesses will not. The decision to proceed with putting annexation to a vote will rest in the hands of the seven elected members of the Kirkland City Council.
BACKED BY COUNTY AND STATE
The annexation is strongly encouraged by the county and the state. The state will provide partial bridge funding for the first 10 years to assist in the transition. Though there will be a slight deficit during the first decade, there will be a significant funding gap after the bridge money is exhausted. The decision before the council in the next few weeks is: Are there enough revenue enhancements that will be acceptable to residents and businesses to meet this gap?
Compounding this challenge is the million-dollar (and growing) deficit that the city budget incurs as a result of increasing labor costs and demands for services by citizens. In front of the council is not only a funding proposal for the annexation deficit but this structural budget deficit as well.
CRITICAL MEETING MARCH 1
A March 1 public meeting presented many funding scenarios for funding annexation as well as solving the city's structural deficit. Like a matrix, operating budget scenarios using levels of service, fire and police response times and other quality of life line items are combined with various levels of funding to produce a sustainable balanced budget over time. Increased economic development is a part of some of the scenarios.
Some of the tax options being considered include:
1) A business tax on gross revenue, known in some circles as a business and occupation (B&O) tax up to .0975 percent.
2) Annual property tax increases up to 5 percent (amounts over 1 percent will have to be voted on annually)
3) Increase of utility taxes up to 7.5 percent
4) Combinations of all of the above in various scenarios
Another issue that needs to be resolved is the future of the business license surcharge which the city council has agreed to review, regardless of the annexation decision. This tax was an interim measure to solve the deficit during the tech sector downturn and 9-11 recession and now has the potential to become a permanent tax burden on business when converted to a B&O tax.
While the business community applauds sustainable budgets, we urge citizens, business owners and employees of Kirkland businesses to carefully weigh in on these proposals.
Bill Vadino is the executive director of the Kirkland Chamber of Commerce.
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