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City staff recommends holding Commerce's tax rate steady amid confusing valuation adjustments
Summary
Staff presented tax-rate calculations that show the city can keep the current rate without a voter election; staff warned state valuation-arbitration adjustments can raise the computed "no new revenue" rate and said final health-insurance numbers will determine whether they can fully fund a proposed COLA.
Presenter (unnamed) walked the council through the property-tax choices required by state worksheets and recommended maintaining the existing tax rate. "We are proposing to keep the tax rate the same," the Presenter said, noting that keeping the rate would still result in an estimated general-fund surplus under the proposed budget.
Staff explained three statutory benchmarks: the no-new-revenue rate (calculated from adjusted prior-year valuations), the voter-approval rate (no-new-revenue +3%) and the de minimis rate available to small jurisdictions (no-new-revenue +8%). The Presenter emphasized that state adjustments for properties in arbitration can change the worksheet late in the process, sometimes increasing the computed no-new-revenue rate. "It's confusing as hell," the Presenter said when describing how prior-year valuation adjustments are carried forward and can make this year's no-new-revenue rate higher than expected.
Staff noted the budget includes a proposed 3% COLA for staff (with patrol originally at 2% before adjustment discussions) and that the ability to finalize raises depends on pending health-insurance rates. The Presenter said insurers initially provided projected increases around 12% but a later preliminary communication suggested a possible 30% increase; staff is contesting that number and expects a final rate in roughly two to three weeks.
On revenues, staff projected total general-fund revenue of $8,230,506 and highlighted $500,000'$600,000 of interest income tied to bond proceeds that have not yet been spent. Sales-tax projections are being held flat at $1,575,000 for the coming fiscal year because staff is not confident in statewide sales-tax growth.
Council did not vote at the workshop; staff said the maximum tax rate to consider will be placed on the August regular meeting agenda and final insurance numbers will be used to confirm COLA assumptions before adoption.
