Camas kicks off 2025-26 budget process; utility tax fight looms

The city of Camas kicked off its 2025-26 budget process this month with a bit of bad news: while the City’s general fund expenses have increased by $12.9 million in the four-year span between 2021 and 2025, the City’s general fund revenues did not keep pace, increasing by $5 million over the same time period.

Cathy Huber Nickerson, the City’s finance director, told Camas City Council members earlier this month, during the Council’s Aug. 5 workshop, that the City has also experienced decreases in some of its general fund revenues since 2021, including $78,000 less in sales taxes and $466,350 less from other tax revenues.

The revenue increases included $2.3 million in charges for services; $1.9 million in property taxes; $645,735 from permits and licenses; $245,626 from miscellaneous revenues; and 626,732 in 2024 from utility taxes, including the City’s new, two-year 2% utility tax on its water, stormwater, sewer and solid waste utilities, which is set to expire at the end of this year.

The City’s general fund expense increases since 2021 have included $2.98 million for salary increases; $2.44 million for new staff positions; $2.15 for Camas’ contributions to the Camas-Washougal Fire Department; $1.68 million for streets; $1 million for employee benefit cost increases; $400,000 for the police body-worn cameras and other police services; $495,000 for the City’s new enterprise resource planning (ERP) software system; $292,000 for library repairs; $241,000 for parks contracts; $274,000 for parks maintenance services; $252,000 for library services; and $176,000 for information technology (IT) services.

Huber Nickerson reiterated that Camas, with its new utility tax, now has a “three-legged stool” revenue model, collecting money for its general fund — which funds the bulk of the City’s services, including fire and rescue, police, streets, parks and recreation, and library services.

Having a “three-legged stool” revenue model, which includes the two-year utility tax passed by the Council in 2022 — as opposed to the City’s former “two-legged stool,” which included only property and sales taxes — helped the City increase its Standard and Poor’s (S&P) Global Ratings to a AAA rating in 2023, meaning the City has the lowest risk of default.

Huber Nickerson said in 2023, that the AAA rating would save Camas taxpayers money.

“This rating upgrade is very important to the city of Camas and staff has been working toward this goal for several years,” Huber Nickerson said in 2023, after the City learned its rating had been upgraded. “The AAA puts Camas in a small group of cities with that rating reflecting its strong economy and management. The AAA is the highest rating offered by S&P, which tells the investors Camas bonds are considered the highest quality grade investment in the municipal bond market.”

The AAA rating saved the City $1.5 million when it issued its 2023 general obligation bond that helped finance parks redevelopment, facilities construction, street construction and other capital improvements.

In July, Councilmember John Nohr said he credited the City’s new utility tax with helping Camas achieve the AAA rating.

“I”ll say it again: the AAA rating was a result of us having a utility tax,” Nohr told the Council during a July 15 workshop. “We sold several million dollars in general obligation bonds and saved $1.5 million (thanks to) a utility tax that hadn’t even collected $500,000 yet.”

Nohr urged Camas officials to “keep that in mind when we’re talking about funding … and that we’re doing what we can to maintain this rating.”

The Council approved the 2% utility tax in a 4-3 vote – with Council members Don Chaney, Tim Hein and Leslie Lewallen voting against the tax — on Nov. 21, 2022. The Council also set conditions that rebates and exceptions be given to qualifying low-income residents, and that the new tax would “sunset” or end with the creation of a regional fire authority, which is expected to reduce the city’s fire and emergency medical services costs, or by Dec. 31, 2024, whichever came first. City leaders in Camas and Washougal are currently meeting monthly to discuss the regional fire authority idea and are expected to bring the issue to Camas-Washougal voters in the spring of 2025.

The 2% utility tax on the city’s water, sewer, solid waste (garbage) and stormwater utilities was expected to add a little over $1 million to the city’s general fund over the 2023-24 biennium. City leaders said the tax was needed to help steer the city away from a looming structural deficit as the costs of running the City were beginning to outpace the City’s general fund revenues.

The issue of the utility tax came up during the Aug. 5 budget discussion, with at least two Council members, Leslie Lewallen and Jennifer Senescu, voicing opposition to continuing the tax past its Dec. 31, 2024, sunset date.

“We went round and round on the utility tax and there’s a lot of pushback (and) folks saying they did not want this,” Lewallen said. “We put a sunset provision in. … Knowing how many folks are really struggling to buy groceries and put gas in their car at the same time … we’ve made it more difficult for folks to live in this community because of that tax.”

In 2022, Huber Nickerson said the new tax would cost the average Camas family an extra $3.56 a month, while the average downtown Camas business would pay an additional $22.25 a month and the average industrial user would pay an extra $1,909 a month.

Senescu said she believes officials “owe it to folks that supported (the utility tax) to follow the intention of the sunset clause.”

But Councilmember Marilyn Boerke said she wanted to help the City move past its history of delaying capital projects and maintenance needs due to a lack of revenues.

“We inherited a situation where things have been delayed and delayed, and now buildings are falling apart, and we can’t sustain what we have,” Boerke said. “I hear what you’re saying (regarding the utility tax sunset clause), but we still need to maintain services to our City. That’s what we’re here for. Every time we talk about the budget, we’re presented with a gap that continues to widen. … At some point, we can’t just keep delaying things. We don’t have the staff to do so many things. I’m also really passionate about our citizens, but our citizens expect a certain level of service.”

Camas Mayor Steve Hogan said Aug. 5, that he intends to do whatever he can to make sure the City keeps its AAA rating in order to save taxpayers money in the future.

“I’m going to preserve that AAA rating on the bonds,” Hogan said. “But to keep that, we have to somehow stop the bleeding.”

Even with the addition of the utility tax, Huber Nickerson told the Council earlier this month, the City is still facing a revenue shortfall ahead of the 2025-26 budget. And, Huber Nickerson added, Camas’ 2% utility tax is lower than many Washington cities’ utility tax rate.

“Almost all Washington cities have all three of these (revenue sources, including property, sales and utility taxes),” Huber Nickerson told the Council Aug. 5. “Even with the (2 percent) utility tax, we’re not up to where other cities use their utility tax.”

Huber Nickerson said the City may want to consider having a “four-legged stool” with more revenues coming in from charges for services to help “prop up the rest of it” and alleviate the City’s unbalanced reliance on property taxes.

“Sales and utility taxes aren’t on par with property taxes, so we’ve been using charges for services for part of that,” she said.

Hogan said other cities in Clark County are grappling with similar revenue issues.

“Everybody is behind, and we’re all looking at how we can stabilize,” Hogan said. “The legs on the stool are pretty important. And if we don’t get more ways to get revenue in, then (the City is facing) pretty severe cuts.”

Hogan said he is trying to find ways the City can “increase revenue, decrease expenses and prioritize whatever staff says are the main needs.”

“That’s how we’ll put the budget together,” Hogan added. “We do have a long list of services we charge for and we’re looking to extend that further and see if there are other ways to get revenue.”

If Council decides it does not want to approve the revenue sources included in the mayor’s proposed 2025-26 budget, Hogan added, he will come back to the Council and ask what services the Council members want to cut.

“If we’re not going to have other ways of getting that revenue that closes the gap … there will be a long list of services we provide that will be on the chopping block,” Hogan told Council members during their Aug. 5 workshop. “We’ll present it to you and ask what you want to take out of it.”

Huber Nickerson said she intends to bring a long-range budget forecast as well as a list of 2025-26 capital projects to the Council during its next workshop on Monday, Aug. 19.