Pasco staff outlines utility-tax options as council debates increases to close budget gap

Deputy City Manager Richard Sigdell told the council Sept. 8 that the city faces a biennial general-fund shortfall and presented options to raise utility-tax rates on city-owned utilities.
Sigdell explained that certain services (electric, gas, telephone) are capped by state law at 6% unless voters approve an increase, while other city utilities such as water, sewer and stormwater are not capped and may be set by council. He presented revenue estimates: a 1-percentage-point increase to city-owned utilities would yield roughly $600,000 annually; 1.5 points about $900,000; and 3 points about $1.8 million. He noted the relationship between a utility-tax increase and customer rates is not one-to-one; for the water and sewer utilities the effect on rates is smaller (roughly a quarter-percent change in rates for a 1% tax change).
Council members asked for detail and context. Sigdell said the budget gap for the biennium is approximately $5.5–$6.0 million and that the city is trying to avoid depleting reserves. Interim budget data presented later in the meeting showed public-safety overtime through July was about $920,000, an amount roughly comparable to the $900,000 estimate for a 1.5% tax increase.
During discussion, Councilmember Harpster said he would support a 1.5% increase as a compromise to help close the gap while the council pursues expense reductions. Councilmember Morales said he would vote no without clearer specifics on where the revenue would be allocated. Councilmember Abraz said she preferred a 1.5% increase rather than raising property taxes. Mayor Milne said he would support a 1.5% increase. Several councilmembers asked staff to return with more detailed estimates and alternatives, including fee studies, levy options and spending reductions.
No ordinance or rate change was adopted Sept. 8; staff requested direction on whether to return with specific proposals for council consideration.