Faced with a mounting budget shortfall, the White Salmon City Council voted unanimously to add an extra one-half of one percent sales tax on sales within the city, effective Jan. 1.
The Dec. 18 council action requires businesses in White Salmon to charge 7.5 percent sales tax in 2003, instead of the current 7.0 percent. Increasing the sales tax is designed to boost the city's revenue stream to help cover the 2003 budget.
To soften the impact, the City Council attached a one-year "sunset clause" on the sales tax, meaning that the resolution will be in effect only from Jan. 1-Dec. 31, 2003.
"I want everyone to know this is not something we do lightly," said council member Tim Stone. "We don't like to add any burden, especially on people who can't get out and shop elsewhere. But the city lacks funds to maintain services."
"There is no other way. The alternative is to severely cut back services to the community," added Mayor Roger Holen. "There has been deep cutting already."
White Salmon's total budget for 2003 is $3.6 million. For 2002, it was $3.5 million.
According to Kelly Ingraham, the city clerk/treasurer, White Salmon was facing a $280,000 shortfall in its budget. The Budget Committee slashed $180,000 out of city departments across the board. The sales tax hike is expected to make up the remainder.
Ingraham estimated that the tax will bring an extra $100,000 of revenue to the city in 2003.
"We cut everything we could cut, and we would be down to cutting jobs if we'd gone any further," Ingraham explained.
Merchants in White Salmon appeared to be caught off guard by the vote to increase the tax.
"I didn't even know this was coming up," said Pam Morneault, owner of Collage of the Gorge.
Maria Shultz, manager of Runyan's Jewelers, was surprised -- and unhappy -- to hear of the tax increase.
"That's terrible," Shultz said. "This year especially, our foot traffic is down by 50 percent. That's ridiculous. Tack on another half percent, and it's just another incentive to go over to Hood River where there's no tax."
However, Debra Reed, manager of the Mt. Adams Chamber of Commerce, said she was sympathetic to the fiscal problems facing White Salmon.
"All the way around, people are needing more money to conduct business. I can't fault the city -- they have to do what they have to do," Reed said.
Reed added that she did not see a major impact from the sales tax boost.
Ingraham pointed to two recent developments that may be responsible for the increasing problems in meeting the city's budget: Voter approval of Initiative 695, which sharply reduced the amount of revenue the state could raise through vehicle tab fees; and the Washington Legislature's inability to provide supplemental "backfill" funds to municipalities to make up for the loss of vehicle registration fees.
Despite the sunset clause built in to the sales tax hike, Ingraham said she was not optimistic the city would be in better financial shape a year from now.
"Unless a miracle happens, it will stay in effect more than a year," she said.
Ironically, the same council members who voted for the sales tax measure last week rejected an identical proposal in April. On April 3, 2002, the White Salmon City Council solidly rejected a proposed half-percent addition to the sales tax, citing concern for local businesses.
Holen, who has been mayor since December 1995, said hammering out the 2003 budget was especially rough.
"This has been absolutely the toughest year of working through the budget process," Holen said. "The state is suffering too, and requiring deep cuts. Hopefully the economy will turn around."