City to request a .03% increase in sales tax to form a TBD

by Richard Uhlhorn

Transportation Benefit District

Mayor Erin McCardle opened up the Transportation Benefit District (TBD) discussion at Tuesday,’s, May 14, City Council meeting telling the members that they had three options to consider, all of which are sales tax increases of One-tenth of One Percent; Two-tenths of One Percent; or Three-tenths of One Percent.

“Growth and tax revenue has not kept up with inflation,” McCardle said. The TBD funds collected can only be used for transportation projects within the district. The District would only cover the City limits of Chelan.

Chelan Public Works currently has $24 million in identified projects on its Six Year Transportation Improvement Program (STIP). Property tax revenue falls way short of even providing required matching funds for transportation grants.

Cities are constantly looking at new funding sources and the TBDs have been adopted by a number of Washington Cities according to Jake Youngren, public works director.

Sales taxes raised through a TBD in Chelan would be split between residents and visitors to the City with visitors paying over 65 percent. Depending on what level the sales tax rate goes up will determine the amount of funding that could be raised.

In 2023 a TBD would have generated the following amounts per year:

• 1% 8.4% to 8.5% would have raised $  405,597
• 2% 8.4% to 8.6% would have raised $  811,195
• 3% 8.4 to 8.7% would have raised   $1,216,792

Other funding sources for Street Capital Project Funding are raising the cost of CAR TABS which would have a huge impact on locals. Permit fee increases would be low.

An example of how the additional funding would be used would be preserving Chelan’s 42 miles of roadway. Replacing them would cost 10-times as much. “The cost would far exceed our capacity,” said Youngren.

McCardle stated that Chelan is in the bottom half of the State Sales Taxes collected.

Councilman Tim Hollingsworth asked if the City could justify the higher rate. Youngren replied that they go after transportation grants hard. Hollingsworth then said, “I think the higher amount is justified .”

Councilman Terry Sanders added that because people are tax adverse it’s up to the City to let them know what the options are. Bob Goedde added that he felt the people will understand the need and used the LINK Transit successful tax increase as an example.

Finance Director Jackie Tupling stated that it is important to drive home the 65%+ that visitors would be contributing to the fund.

Goedde feels that the City can do a great job of informing the public.

The City Council unanimously approved a motion to seek a .03% sales tax increase to form a Transportation Benefit District.