BURLINGTON — A Burlington City Council member expressed interest Thursday in rolling back taxes on business income and utilities after a positive financial report was discussed at a council meeting.
Finance Director Joe Stewart said the cuts to city services brought on by the COVID-19 pandemic and months of higher-than-expected sales tax revenue means the city is in a stronger place than he would have expected last year.
As of the end of May, he said the city general fund had a balance of about $4.3 million, and that’s before an expected $2 million in pandemic recovery assistance through the federal American Rescue Plan Act.
Upon hearing Stewart’s report, Council member Joe DeGloria proposed the city re-evaluate tax increases the council approved last year at a time when the city was on more tenuous financial ground.
Last summer, the city implemented a 0.1% tax on business revenue exceeding $1 million a year, and increased taxes on several utilities.
When these new taxes were implemented, the city was in rough shape, but “it’s completely obvious we are no longer in that scenario,” DeGloria said.
Council member Bill Aslett was quick to challenge DeGloria, saying the city’s financial struggles these taxes were put in place to address predate COVID-19.
“If you remember, you and I and other council members were worried about the balance of expenditure and revenue before then,” he said.
Aslett urged DeGloria against having a knee-jerk reaction to one favorable financial report, saying that type of behavior has gotten the city into trouble before.
Council member Scott Green said having a large amount of reserves could help the city tackle projects it couldn’t afford before, and specifically mentioned streets that have long needed repaving.
Stewart said agreed that rolling back the taxes based on this recent good financial news may not be the best thing to do.
“With how volatile the last year has been, we need to see what normal is,” he said.
Earlier in the meeting, Mayor Steve Sexton and members of the council expressed concern that the Skagit County Board of Commissioners will consider a countywide 0.1% sales tax increase to fund affordable housing and homeless services.
If the commissioners take this path, Burlington would be prohibited from implementing a similar tax on its own. Sales tax revenue generated by the increase would go straight to the county, and Sexton said the cities in the county would have no legal say over how it’s spent.
“We have a good relationship with the county right now, but it hasn’t always been that way,” he said.
Sexton suggested the cities pass their own tax increases before the county does, then negotiate with the county to ensure “we have some say over how the money is spent.”
Burlington generates the most sales tax revenue of any municipality in the county. Despite making up about 7% of the county’s population, it generates about 35% of sales tax revenue countywide.
Aslett was one of several council members who agreed with Sexton.
Council members also agreed Thursday to go back to in-person meetings, starting at its next meeting in July.
Since early in the pandemic, the City Council has been meeting via conference call.
