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City staff recommend holding 2026 property tax increase to 0%; council to consider levy ordinance in November
Summary
Finance staff reported Oct. 7 that major revenue sources (sales tax, permit activity, REET and state-shared revenue) are stable. Staff presented options for 2026 property-tax levy setting: the statutory 1% default, a 0% option, or using a portion of banked capacity; council will receive a formal levy ordinance next month.
City finance staff reported to the Liberty Lake City Council on Oct. 7 that major local revenue streams are stable heading into 2026, and that staff will bring a formal property‑tax levy ordinance to the council next month for consideration.
Finance director Kyle (city staff) said sales and use tax collections have remained strong and that building permit and real‑estate activity continue at levels that support steady revenue expectations for 2026. Staff estimated that the city’s major discretionary revenue sources remain stable and recommended the council consider whether to adopt a 0% levy increase (the ordinance the city has enacted in recent prior years), to take a partial or full statutory amount of “banked capacity” (a lawful additional levy that accumulates when the council has not previously increased the levy) or to use the 1% statutory maximum.
Staff provided specific figures to illustrate the choices: the 2025 regular levy base was about $3,170,000 and the estimated new‑construction increment for 2026 is roughly $109,000 (the assessor’s new‑construction credit that increases the levy capacity). Staff estimated a hypothetical levy rate in the neighborhood of the current rate (reported in the presentation as roughly $0.0857 per $1,000 of assessed value), and showed that for a $500,000 assessed home the city portion of property tax would be approximately $428.50 per year under current assumptions. Staff emphasized that the full financial effects of any levy decision will be presented in the budget binders to be distributed to council before budget hearings.
Council members asked procedural questions and staff confirmed the ordinance electing any levy change will be introduced next month. A public hearing on sources of revenue was opened and closed during the Oct. 7 meeting with no public testimony recorded at that time.
Ending: Staff will present the formal levy ordinance for council action next month, with budget binders and staff recommendations on revenue options. Council members asked staff to schedule additional budget briefings and consider whether a special meeting will be necessary for final budget and levy adoption in late November or early December.
