Eatonville council anticipates future budget problems

Budgetary challenges are ahead.

Even as the Eatonville Town Council approved increased levy rates for next year’s property taxes and emergency medical services at its Nov. 8 meeting, first readings of an ordinance amending Eatonville’s 2021 budget and the town’s proposed 2022 budget made clear the financial rocky road ahead.

“There’s a few things on this budget that are very concerning,” Councilmember Bill Dunn said of the preliminary 2022 budget in the form of Ordinance 2021-12, referring to increased costs related to fire and medical services provided by Pierce County.

Those two things, he said, are “bearing an incredible weight on current expenses.”

According to the annual budget for 2022, the estimated beginning balance is just more $6.9 million, with estimated revenues at almost $9.8 million. Estimated appropriations/expenditures are a little more than $10 million for an estimated ending fund balance of almost $6.5 million.

The hit on the town’s finances by the COVID-19 pandemic was acknowledged.

“If I remember correctly, current expenses budgeted are to take a roughly $350,000 hit this year, according to the budget,” Dunn said. “So, this is something that is going to have to be rectified by very difficult decisions we are going to have to, have to be made, and tough conversations are going to be had.”

The approval of Ordinance 2021-9 and Ordinance 2021-10, the property tax levy and EMS levy, respectively, seemed to offer little relief regarding the town’s fiscal future.

Next year’s tax levy includes an increase over this year of $6,863.53, representing an 0.961 percent hike. Property tax bills are based on the taxable assessment of said property and local tax rates. Those tax rates are determined by dividing the total amount of money that has to be raised from the property tax by the taxable assessed value of real property in Eatonville.

Per state law, the property tax levy is subject to a 1 percent annual levy lid — that is, the levy amount may not increase more than 1 percent per year, plus add-ons for new construction, new annexations, increases in state-assessed properties and construction of certain renewable energy generating facilities.

The EMS levy, also subject to the 1 percent levy lid, for next year includes an increase over this year of $1,113.37, an uptick of 1 percent over this year. Local governments may, with voter approval, impose a property tax of up to 50 cents per $1,000 of assessed value for emergency medical services.

Therein lies the problem, Dunn said, adding there is roughly a $70,000 gap between what Eatonville could be collecting with the EMS levy versus what the town is actually bringing in now.

That gap for the property tax levy is $530,000, he said.

“So, between the two of those, you’re talking roughly a $600,000 void as far as the town’s capacity versus what it is currently collecting,” Dunn said. “And that’s simply because of the rate of assessed value — how quickly the rate of assessed value is climbing in comparison to the town’s ability to just raise the tax collection by 1 percent.”

The town’s budget woes are in spite of federal funds received this year meant to lessen the impact of the pandemic.

“So, we did receive the American Rescue Plan Act funds — ARPA funds — effective for this year,” Mayor Mike Schaub said. “We received $422,792, so we are amending the budget for both the revenue and authority to spend that as an expense.”

Eatonville is slated to receive additional ARPA funds next year in the amount of $422,792.

Councilmember Emily McFadden asked about the next step in dealing with the town’s budget dilemma.

Schaub mentioned two possibilities for consideration: putting Eatonville’s fire and emergency medical services under full control of South Pierce Fire and Rescue and asking voters to authorize lifting the levy lid.

The council is set to vote on final passage of this year’s amended budget and adoption of the 2022 budget during its next meeting on Nov. 23.