Property tax increase passes, annual budget passed & more discussed at Des Moines City Council Thursday night

EDITOR’S NOTE: The “big news” from Thursday night’s Des Moines City Council meeting was the termination of City Manager Michael Matthias, which was a big enough story to warrant its own, separate post – read it here.

Here’s our recap of the Des Moines City Council meeting held on Thursday night, Nov. 9, 2023:

Public Comments

A concerned community member asked that the city do more to address speeding on 223rd. Drivers often go upwards of 60mph along this thoroughfare, far exceeding the speed limit. Law enforcement has been responsive when calls are made, but this speaker and her neighbors are seeking more of a long-term solution to increase public safety.

Multiple people spoke in support of preserving the historic Masonic Home, asking that state funds be sought in a public-private partnership. This iconic building, it was noted, can be seen from across Puget Sound, and there is strong community interest in its preservation.

Another couple spoke about their formerly popular swimming pool, which they had rented out by the hour on short-term rental sites. The city, they found out, does not allow short term rentals and they were hit with a $1,000 fine. They had a petition with signatures of the many fans of their pool, and asked council for reconsideration of this policy. Creating a short term rental license process, they said, would benefit homeowners, neighbors who enjoy renting the pool, and the city in the form of tax revenue and business licenses. Mayor Matt Mahoney responded to this comment, saying the question of short-term rental licenses is on the work plan for 2024.

Property Tax Levy Passes Unanimously

During this presentation a graph showed that the Des Moines property tax rate has been decreasing each year since 2016, so 2024 will be the first increase in many years. At $0.91 per $1000 in assessed value, it will remain below the 2022 rate of $1.00 per $1000 in assessed value.

It was also pointed out that the city of Des Moines gets just under 8.1% of the total property taxes paid by homeowners. The lion’s share, 58%, goes to state and local schools, and another 13.7% to the fire district. Other categories that receive property tax dollars include King County, the library, EMS, and transit.

2024 Preliminary Annual Budget Passed

Financial projections show that after 2024 the annual general fund balance will be below the minimum required. As City Manager Michael Matthias explained, this does not mean the city is not solvent, but just that the general fund will have less money in it at the end of each year than is ideal. Repurposing the remaining ARPA funds and turning Events & Facility Rentals into an independant enterprise are two ways of closing the projected general funds gap.

Matthias also said that this action is in response to outside forces that greatly reduced city revenue, specifically Covid 19. According to the presentation, city revenue dropped from $233,000 in 2019 to $16,000 in 2020. With all the costs of keeping a city running, that shortfall has had a cascade of effects. However, Matthias is confident the budgetary changes will have the desired effect, keeping the city thriving and maintaining all staff jobs long term.

Events & Facility Rentals have historically operated at a large deficit, with the shortfall being covered by, and buried in, the city’s general fund. In 2023 so far, this deficit is nearly a quarter of a million dollars, and some years it has been higher. With a short term, low interest loan from another city fund, the new enterprise will have three years to turn itself into a business whose operating expenses do not exceed its revenue. It is hoped that with improved marketing, restructured rates based on market value, as well as other strategies, it will be a thriving entity. If the enterprise fund is not solvent in three years, Events and Facility Rentals will simply go back to being a part of the general fund.

Ad-Hoc Finance Committee Passed

Deputy Mayor Traci Buxton proposed an amendment that there be a temporary finance committee, composed of both members of the city council and the community at large. This committee would be charged with the task of examining line items on the city budget. The goal would be to find ways to generate more revenue and reduce expenses, for example discontinuing services that are no longer used.

Councilmembers Vic Pennington and Harry Steinmetz agreed that this would be a proactive approach for diverting budgetary problems. Councilmember JC Harris disagreed, stating that a finance committee shouldn’t be temporary, and also that “community input is great, but not on a budget”. He clarified that he didn’t think members of the public would be familiar with financial terms required to understand city finances. Pennington responded that of course the community should have input on the budget, since they’re paying the bill.

The amendment to create the finance committee passed in a 5–2 vote, with details to be determined at a later date.

No Money To Be Set Aside For Communications

Councilmember Harris proposed an amendment that the city set aside $100,000 to be used for the creation of an improved website and app. City Manager Matthias reminded council that feedback is imminent from the communication consultants that were hired, and that any decisions about spending money for communications might be made after having this information.

Harris countered that the website needs are so obvious, he feels totally comfortable setting aside this money. Councilmember Gene Achziger said that having nothing allocated in the budget for communication seems so shortsighted. Councilmember Buxton said that if there was any extra money to set aside, it should be used for an officer. Councilmember Steinmetz asked, “$100,000 from where?” adding that this amendment was not thought out. Harris reiterated that the public wants this, but the amendment failed in a 2–5 vote.