City Council voted on Monday, Nov. 17, to increase the property tax levy by 1 percent for 2015.
The increase in property taxes will generate $23,603 in revenue for the city. The owner of a $250,000 home will pay an additional $5.26 in 2015, according to city documents.
The council could have voted for a 2 percent increase that would have eliminated a projected $15,000 deficit for 2015 but will instead look to make cuts elsewhere in the budget, council member Jon Mutchler said.
“I think that just shows that this council is hugely reluctant to raise property taxes at all,” Mutchler said.
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An initiative written by conservative political activist Tim Eyman that was passed statewide in 2001 limits local governments from increasing property taxes by more than 1 percent a year. However, cities are allowed to increase property taxes by more than 1 percent if they did not increase property taxes in previous years.
Ferndale did not increase property taxes from 2010-12, but did increase the tax by 3 percent for 2013 and by 1 percent for 2014.
Council member Mel Hansen moved to increase the property tax levy by 1 percent for 2015 instead of 2 percent, and the ordinance was unanimously approved by the council on Monday.
“If it’s good for Tim Eyman, it’s good for me,” Hansen said at the meeting.
Finance director Mark Peterson outlined some of the fiscal challenges the city faces, including a 3 percent increase in fire services amounting to a cost of more than $40,000. He said medical insurance for government employees also will increase.
A 2 percent increase in the property tax levy would have given the city a projected $9,000 surplus, according to city clerk Sam Taylor.
Mutchler said he is confident the city can trim the budget to avoid a deficit without a bigger increase in the property tax. For example, he said the city is trying to move all government employees to a different health care plan to save money.
“The Affordable Care Act has not been particularly affordable for the city of Ferndale,” Mutchler said.
The 1 percent increase in property taxes won’t keep up with inflation, but the city did not want to put a greater burden on property owners, Mutchler said.
“It doesn’t solve all of the problem, but it solved some of it,” Mutchler said.