Shelton council weighs diverting REIT and a TBD sales tax to shore up street maintenance

Council members and staff discussed multiple options to fund street maintenance at the Sept. 23 study session, including continuing some general‑fund transfers, dedicating real estate excise tax (REIT) proceeds to the street fund, or placing a 0.1% Transportation Benefit District (TBD) sales tax on the ballot.

City staff noted the 2025 budget included a $400,000 general‑fund allocation to the street fund and said the 2026 baseline initially removed that allocation to prompt discussion. Staff presented a compromise in the department requests that would allocate $200,000 from the general fund to the street fund in 2026 and suggested the remaining $200,000 could be offset with REIT proceeds or a new TBD sales tax if council chose to preserve other REIT priorities.

Public works staff explained the street fund operates with about 4.65 full‑time equivalent positions and that a $200,000 reduction could force the department to move from proactive maintenance to purely reactive work, potentially leading to worse pavement condition and higher long‑term costs. One council member described REIT as “a band‑aid” and warned that spending all REIT on streets would deprive other capital priorities of funding.

The council discussed the cost to a typical household of a 0.1% TBD sales tax and the political pros and cons of asking voters to approve additional sales taxes. Several council members said they preferred a voter‑facing discussion (town hall or public hearing) before placing a tax measure on the ballot, while others urged staff to model impacts and return options.

No final decision was reached. Staff was directed to return with reconciled fund projections showing the effect of various mixes of general fund transfers, REIT uses and a TBD or public safety sales tax on both short‑ and multiyear capital and operating plans.