Community Government

Gig Harbor City Council puts sales tax increase before voters

The Gig Harbor City Council voted unanimously on Monday, Feb. 26, to place a proposed sales tax increase before city voters on the Aug. 6 primary election ballot.

The 0.1 percent sales tax increase would bring the city’s overall sales tax rate to 9.0 percent. The city would use proceeds from the increase to fund public safety programs, with at least one-third going to law enforcement.

City staff say Gig Harbor faces a general fund shortfall of up to $3 million starting in 2025. The sales tax increase would bring in a projected $1 million.

The city is also asking voters inside city limits to increase the lid on property tax collections. If voters approve the lid lift on the April 24 special election ballot, the city could increase its property tax rate from the current 70 cents per $1,000 of assessed property value to $1.10 per $1,000.

The lid lift would bring in an estimated additional $2 million for the city’s general fund.

New hire for police department 

City Administrator Katrina Knutson told the council that revenue from the sales tax would help the Gig Harbor Police Department handle several looming issues.

Knutson said the police department foresees increased costs for radio and dispatch services; training; vehicle replacement; jail booking; and accreditation.

Among other things, the city hopes to use proceeds from the public safety sales tax increase to hire an administrative lieutenant in the police department. The department currently has one lieutenant, who handles both administrative and operational duties. The new hire would allow the department to split those functions.

Knutson also said the city would consider staffing a school resource officer in Peninsula School District high schools. However, she cautioned that such a move would depend on exactly how much the sales tax brings in, the salary of the new lieutenant position and negotiations with the school district.

Along with police services, the resolution approved by the council at Monday’s meeting identifies reducing homelessness and improving behavioral health services as priorities for public safety sales tax revenues.

Rate still lower than many cities

The sales tax increase would still leave Gig Harbor with a lower rate than most nearby cities, according to the city administrator. Tacoma’s sales tax rate is 10.3 percent, while University Place, Fircrest and Ruston are at 10.1 percent. Farther afield in Pierce County, Bonney Lake and Sumner charge 9.5 percent sales tax rates.

Knutson pointed out that sales taxes inside Gig Harbor city limits are paid not only by city residents, but also by “anyone who shops within the community. And we do know from the most recent Puget Sound Regional Council numbers that our city grows from 13,000 to between 20,000 and 25,000 people during the day.”

Only one resident offered public comment on the sales tax measure, and endorsed it. All seven council members voted to send the proposal to voters.

Split council endorses lid lift

The council also voted in favor of a resolution expressing support for the levy lid lift. That vote was not unanimous, however. Council members Jeni Woock and Roger Henderson voted against it.

Woock and Henderson argued that the city should have asked for a lower lid lift and combined it with a business and occupation tax. A B&O tax is a tax on “the value of products, the gross income of the business, or the gross proceeds of sales,” according to the Municipal Services Research Center.

Henderson said that if the city imposed a B&O tax, “we could have had a lower levy lid lift for everybody else. … We’d have some of our bigger businesses paying for some of this.”

Other council members argued that the sales tax does enough to balance the burden between property owners and others who access services in the city.

“Like others in Gig Harbor, I don’t want my taxes to go up. I don’t think anyone anywhere does,” Council Member Mary Barber said. “But I do support this levy. And one of the reasons I do is, we’ve found a way to spread that burden beyond the property taxpayers. By adding this sales tax … those who shop here will help to pay for those roads and police and services they use.

The city has not asked voters to lift the lid on property tax collections since the 1980s. Inflation-adjusted property tax revenues grew only 8 percent in the past decade, while the city population exploded by 65 percent.

The city maintains a webpage with information about the lid lift and the sales tax levy here.

Sister Cities liaison

The council unanimously voted to appoint councilmember Le Rodenberg as the city’s representative to the Gig Harbor Sister Cities Council executive board.

The Sister Cities Council is a new nonprofit formed to enhance Sister Cities relationships, especially the cities of Bodo, Norway and Milna, Croatia. The goal of the Sister Cities Council is to “enrich cultural understanding, create adult and student exchange opportunities and broaden cooperation to encourage goodwill between the city of Gig Harbor and other cities around the world.”