The Kirkland City Council has approved a one percent increase on the tax levy amount in order to close a budget gap while preparing for loss of sales tax credit in the future.

Their resolution found a substantial need to raise the levy by one percent, while an ordinance established the actual increase. The levy raises a specific amount in revenue, while King County determines the actual tax rate, which can go up or down, based on property value.

The final levy will be brought forward for adaptation at the council’s Dec. 8 meeting.

Without the finding of substantial need, city officials stated that they would have only been able to raise the tax amount based on the Implicit Price Deflator (IPD), which is a measure of inflation determined by the state based on factors such as the cost of living. This year, the IPD was a quarter of a percent.  According to Director of Finance Michael Olson, the vote was needed to close a $201,326 in the city’s biennium budget or otherwise cut the spending. According to a city memo, the budget reduction would have affected the General Fund, the Parks Maintenance Fund and the 2012 Parks and Roads Levies, as well as “translate into a permanent loss of property tax revenues in future years.” Additionally, it would have amounted to a loss of $2.1 million in 10 year’s time if they had only increased the tax levy according to the IPD.

The city estimates its loss of annexation sales tax credit in 2021 to be around $211,596.

The city also needed to pass the resolution and the ordinances in order to meet King County Council’s deadline for levy amount submissions, which is today.

The council also voted to approve a separate fire district levy of $480,000 to pay debt service on Fire District 41’s outstanding bonds. The levy only affects neighborhoods that were in the district.