Mercer Island Tax Hike Recommended To Fix Budget Problems

MERCER ISLAND, WA - A citizen group tasked with finding a fix for Mercer Island's budget problems has recommended raising taxes. If approved by City Council, a measure to increase taxes will appear on the November ballot.

The Financial Challenges Community Advisory Group held five meetings this winter to find solutions to a projected budget shortfall. At the final meeting on April 2, a majority of the group voted in favor of a ballot measure that would increase property and business and occupation taxes, and would renew a utility tax set to expire at the end of the year.

City Council will start looking at the tax increase measure in May.

City officials have known about possible budget shortfalls for several years. Mercer Island has seen record development recently, leading to a big increase sales tax revenue and development fees. But that activity is slowing down, so fees and taxes will drop.

Compounding the problem is Tim Eyman's 2001 Initiative 747. The initiative created a state law capping annual property tax increases at 1 percent. The cost of city services increases each year by more than 1 percent. Mercer Island can't increase property taxes without the approval of voters, according to state law.

Without taking action, the city will start seeing big budget gaps starting in 2019 at $2 million. By 2024, the deficit could reach $7.3 million.

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