SPOKANE, Wash. — The population growth in Spokane could bring more revenue for the city and county in the form of taxes.
There are three main taxes that feed into the city's fund:
- Utility tax
- Property tax
- Sales tax.
Utility tax is determined by the city council every year. The mayor suggests how much that tax should be, then the council debates and approves it. Utility tax does not depend on population size.
Property tax is also not affected by population size or growth. In simple terms, voters decide how much money the city should receive from property tax, then that sum is split between homeowners. Revenue from property tax does not fluctuate much throughout the year.
Sales tax is more subject to change though. Revenue from sales tax fluctuates throughout the year, depending on how much money people spend in the city. In theory, the more people living in Spokane, the more people there are to spend money here.
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The city has a team of people who use algorithms and models to predict how much sales tax the city will receive each year for the budget. According to City of Spokane spokesperson Brian Coddington, that team is typically spot on with the predictions.
The point of the models is to account for population growth throughout the year, and how that affects the amount of revenue the city will receive. Any excess money at the end of the year is put in a reserve fund.
As the city receives more money, there is also more to spend money on. Coddington said as Spokane grows the city must pay more for services.
"It is a balancing act, and it's something that you spend a lot of time being thoughtful and careful about. Generally speaking, it works. But when you grow quickly it does present financial challenges as well," Coddington said.
On top of rapid growth, unforeseen economic stressors such as the pandemic can also affect sales tax revenue. That makes it harder for the city to keep up with increased wear and tear on the city.