Camas City Council greenlights new revenues to close budget gap

In an effort to shore up a nearly $6 million budget shortfall, maintain the city’s streets and invest in the police department, the Camas City Council this week approved several revenue packages included in Camas Mayor Steve Hogan’s proposed 2025-26 budget.

The Council adopted an ordinance that will sunset the existing 2% tax on the City’s water, stormwater, sewer and solid waste (garbage) utilities on Dec. 31, and begin a new 2% utility tax the following day, on Jan. 1, 2025. The ordinance includes a mandatory review of the tax during the City’s biennial budget process and also allows the City to waive or decrease the utility tax for low-income residents.

“We are talking about re-adopting the 2% utility tax to fund core services such as the municipal court, the fire department, the library, parks and recreation (and) streets maintenance,” Camas Finance Director Cathy Huber Nickerson told Council members during their regular meeting on Monday, Nov. 18.

Huber Nickerson added that the 2% utility tax — originally approved by the Council in 2022 to bridge a funding gap in the City’s general fund until Camas and Washougal could find a better solution for funding the cities’ joint fire department and help diversify the City’s revenues by creating what Huber Nickerson has called a “three-legged stool” of property, sales and utility tax revenue sources — was part of Hogan’s plan to close a $5.8 million revenue gap in the 2025-26 budget and maintain the City’s current levels of service.

The City had faced an $8.7 million structural deficit, thanks to expenses that increased by $12.9 million between 2021 and 2025 — mainly due to increases in salaries and benefits, new staffing positions and contributions to the fire and streets departments — but cut that deficit by nearly $3 million after reducing its baseline costs by $200,000, saving $2.4 million by not filling 16 positions approved in the 2023-24 budget and reorganizing its information technology (IT) and facilities departments to save an additional $316,000.

“That still leaves us with a deficit of $5.8 million, with budget priorities that include basic needs in the general fund, cost-preventative street maintenance and critical police staffing,” Huber Nickerson said Monday.

To close that revenue gap, she added, the mayor’s proposed 2025-26 budget included taking the state-allowed 1% property tax levy increase, approving the 2% utility tax that will begin Jan. 1, 2025, and approving a Transportation Benefit District to help fund street preservation and other streets-related needs.

Hogan’s proposed budget also called for sending a 4% utility tax proposal to Camas voters in February 2025 to fund new supervisory positions in the Camas Police Department and help that department plan for a slew of impending retirements.

On Monday, a majority of the Council approved all of the mayor’s proposed revenue packages, including:

• The new 2% utility tax, which is expected to raise $1 million for the City’s general fund services — including police, fire, parks, library, streets, cemetery and other basic services — over the course of the 2025-26 budget cycle;

• Increasing the property tax levy by 1%, which will collect an estimated $15.63 million in property tax revenues in 2025 while still lowering the average Camas taxpayer’s property tax bill by about $6 a year;

• Increasing fees for City provided services by market rate or by a minimum of 10% to generate approximately $227,000 in additional general fund revenues in 2025;

• Increasing the City’s business license fee from $10 to $50 a year to match other Clark County cities’ business license fees and collect an additional $133,750 for the City’s general fund in 2025.

• Placing an additional 4% utility tax on the Feb. 11, 2025 ballot so voters can decide if they are willing to help raise the $1 million a year that is needed to fund what Camas Police Chief Tina Jones has called “critical” staffing needs (see related story in this week’s Post-Record), including the hiring of two police sergeants, one administrative lieutenant and one police officer to help plan for a potential “retirement cliff,” attributed to the fact that 45% of the Camas Police Department’s sworn officers will be eligible to retire within the next five years and that, according to Jones, it can take nearly 18 months to recruit, hire and fully train new police officers; and

• Creating a new Transportation Benefit District that will impose a one-tenth of 1% sales tax and annual $20 vehicle license fee to generate a combined $1,070,000 a year ($500,000 from sales taxes and $570,000 from the license fees) to pay for street preservation and other street-related needs. The current sales tax rate in Camas is 8.5%, which includes the state’s 6.5% sales tax, a 1% city of Camas “basic” sales tax, a 0.1% criminal justice sales tax, a 0.7% C-TRAN sales tax, a 0.1% Clark County public safety sales tax and a 0.1% Clark County mental health sales tax. The addition of the Transportation Benefit District sales tax will bring Camas’ total city sales tax rate up to 8.6%. The Council could vote to increase the District’s license fees to up to $50 — but only after the $20 fee has been in place for two years and a $40 fee has been in place for an additional two years — but would need voters to approve annual vehicle license fees over $50.

Although a majority of the Council approved all of Hogan’s revenue requests, some City Council members objected to all or some of the revenue packages.

Council member Leslie Lewallan voted “no” on all of the revenue packages.

Council member Jennifer Senescu voted “no” on the 2% utility tax, on sending the 4% utility tax to voters in February, on taking the state’s allowed 1% property tax levy increase and on the creation of the Transportation Benefit District. Senescu said she would have rather had no vehicle license fee and send a proposal for a sales tax of three-tenths of 1% to fund streets to the voters instead

“I marvel as I look at our agenda tonight,” Senescu said Monday. “When does it stop? It’s got to stop. … We’re trying to balance our budget on the backs of residential property owners. We had three options (for the Transportation Benefit District’s funding sources). We had the 0.1% sales tax or the $20 vehicle fee (and a voter-approved 0.3% sales tax option). And now we’re going to do both? … I’m a ‘no’ on this.”

Council member John Svilarich, who was arrested by Camas police earlier this year for allegedly brandishing a gun during an argument with a fisherman along the Washougal Greenway Trail in Camas, abstained from voting on the ordinance that would fund new police positions but said he is “absolutely in support of funding growth in the police department.”

On Monday, Huber Nickerson explained why the City was facing a revenue shortfall in 2025 and 2026.

Huber Nickerson said Monday that the City had experienced a dip in revenues thanks to property tax increase limitations, higher mortgage rates and slower sales taxes as well as an increase in labor costs and other overhead costs.

“As in all cities and school districts in Clark County, inflationary costs of critical services exceed revenues,” Huber Nickerson said. “From 2017 to 2022, our revenues either exceeded or stayed in line with our expenditures. But, when inflation started spiking, our expenditures exceeded our revenues.”

She added that the City had been using its general fund reserves to shore up budget deficits, but that “if we don’t find funding or have substantial cuts to services,” the City’s savings would be depleted by 2026.

The City’s budget policy is to maintain a balanced budget while keeping the general fund reserves to a 22% minimum. That fund balance minimum, combined with the City’s addition of a utility tax, which gave Camas a more stable “three-legged stool” revenue base helped earn the City a AAA credit rating — the highest credit rating it can receive.

“Only a few cities in Washington have that rating,” Huber Nickerson said. “It’s important because it means you often can pay less in debt interest rates, so when the City needs money to put into our streets, parks, etcetera, our interest rates are lower.”

Huber Nickerson added that it is “essential” for the City to maintain its vaunted AAA credit rating. “Once you lose that, it’s very rare to get that back,” she said.