Bingen anticipating revenue loss

“Overall, there will be a reduction in the amount of tax the city will receive for the second, third, and fourth quarter of 2022,” City Administrator Krista Loney wrote in a March 25 staff report.

The state of Washington allows cities and counties to charge an additional .5% in sales tax. According to Klickitat County officials, their approval of the tax increase on Jan. 4 marks the last county in the state of Washington to do so, and the county continues to charge the lowest sales tax rate in the state.

The resolution that county commissioners approved Jan. 4, in effect, brings the unincorporated areas of the county up to same tax rate as the cities of White Salmon and Goldendale, according to County Fiscal Manager Jennifer Bartley. Because both cities also approved such optional tax increases, the state provision allowing for the increase requires that the county receive 15% of such taxes.

According to Bartley, the county chose to raise the tax rate following a discussion on how the county can close the current multi-million dollar deficit outside of cutting costs. In order to offset the burden on cities due to the revenue sharing provision, county officials approved a rescinding of a .25% charge on real estate excise taxes collected by cities within the county.

In Washington, sales tax revenue is not restricted, while real estate excise taxes can only be used for capital funding.

As an attempt to estimate the potential impacts to the 2022 budget, Bingen city staff calculated that the city would have lost approximately 6.5% of its unassigned tax revenue, or close to $20,000, in 2021 if the resolution would have been put into effect that year.

However, the city’s sales and tax revenue is outpacing sales and tax revenue this time last year, according to the staff report, but impacts to the city won’t be seen on paper until the end of the year as the city uses year-to-date revenues to create the budget for the following year.

Mayor Catherine Kiewit said the new tax changes were expected to impact Bingen’s neighboring cities in the county.

County Board Chair Jacob Anderson said the decisions were made with inflation in mind, saying that the rate of inflation has risen higher than the county’s revenue. Anderson said the county was required to exchange their ability to earn income through a real estate investment trust to implement the sales tax increase.

Asked what input the City of Bingen was offered to provide, Anderson said that the county held a public hearing and took citizen comment.

“The cities realized that, they ve been better off than every other city in the state,” Anderson said, noting that the county tax rate is still the lowest in the state.

“It is in essence a very small amount of money based off what we subsidize them for court services,” he said.