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7th Richest City In The US Is Running Out Of Money

Jeff Bezos and Bill Gates are among the richest persons in the world with a worth of $119 billion and $107 billion respectively. Amazon has its headquarters in Seattle while Microsoft is located just outside the City with both billionaires having their homes in the small town of Medina, Washington.

Medina has a population of over 3,000 and is considered to be the seventh richest zip code in the US with a median home value of $2.77 million. The town enjoyed a median household income of $186,464 in 2017 – as per the most recent data that is available. For comparison’s sake, the median household income in the US during 2017 was $60,336. And despite that, Medina is running out of money!

The problem? The home values are increasing, but the income of the City is not rising in accordance. According to 2019 Medina city newsletter, ‘You may find it hard to imagine that the City doesn’t have enough income to sustain current service levels, particularly in this economy. While property values continue to rise, the City’s tax revenues don’t rise in tandem.’

Why is that, you might ask? The local government, as per the law, is not allowed to increase the amount of tax revenue that it collects by more than 1% without the residents voting to approve a larger amount. According to Medina’s director of finance, Julie Ketter, the property tax rate in Washington state is defined as the rate and not percentage. For Medina, the property tax rate is $7.9295 per $1,000 of the assessed value. Ironically, only $0/63486 of this goes to the City of Medina.

To put this into perspective, the most expensive home in Medina has been assessed by the King County Assessors office at a value of $131,239,000. The property tax for this house in 2019 comes out to be $1,040,627. Out of this, the City of Medina will only receive $83,318. The median value of a home, as per Ketter, is only just over $2 million. This means that in 2019, Medina will only be able to collect $2.8 million in property taxes. An increase of 1% in that comes out to be an additional $28,000. The newsletter said, ‘Fire services alone increased by nearly double that amount in 2019.’

In order to rectify this budget shortfall, the town will be voting in November to lift the cap on the property taxes in order to ’provide funds to continue current service levels without significant cuts.’ The suggested increase in regard to the property tax in Medina would be raising the property tax by 20 cents per $1,000 of the assessed value. The City has stated that if it continues to operate without increasing the property taxes, the City will have a deficit of $500,000 by 2020 and a deficit of $3.3 million by 2025. The newsletter has said, ‘We’re on an unsustainable path.’

Danny Westneat of Seattle Times writes, ‘Need more proof that Washington’s tax system is as messed up as it gets? Even the richest town in the state can’t make it work. The town of 3,200 is discovering what King County, Seattle and countless other municipalities around here have been screaming for nearly two decades: the math doesn’t work anymore. I hear some really important people live in Medina. Maybe now that it’s their town that’s said to be in ‘dire straits,’ these questions will finally get some traction.’

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