Kent Mayor Dana Ralph kicked off her city budget roadshow on the West Hill and let residents know that cuts as well as new taxes or fees are coming in the next year or two.

”We have to make those really hard decisions and they are not going to be popular,” Ralph, in her first year as mayor, said to about three dozen people at a public meeting Tuesday night at the Trinity Community Church on Reith Road. “There are going to be residents and businesses that are going to be impacted. But I am going to make that promise that we are drawing the line.”

Kent will lose about $10 million a year in state revenue over the next couple of years. The mayor, City Council and staff are trying to figure out with public input where to make cuts and what new taxes or fees to implement.

The anticipated shortfall will be caused by the loss of streamlined sales tax mitigation (starting in 2019) and the expiration of the Panther Lake annexation sales tax credit (in 2020). The city also has a structural budget deficit of about $2 million a year because expenses grow at a faster pace than revenues.

The state uses the streamlined sales tax mitigation to help compensate Kent for revenue lost when legislators changed the state in 2008 from an origin-based system for local retail sales tax to a destination-based system, gutting the tax revenue the city received from its large warehouse district. The city also will lose about $4.7 million it receives each year for the Panther Lake annexation in 2010, an expiring 10-year agreement between the state and the city to help cover expenses in that area of about 24,000 people.

“The city as a whole, we need to stop spending money and we need to look at how we are going to solve this problem,” City Finance Director Aaron BeMiller said at the meeting. “We’ve had two council retreats to discuss this. We need to start looking at ways to address this and coming to grips with it.”

City leaders are considering an annual car tab fee of $20 as well as a possible increase in property taxes.

“I think the $20 car tab tax is probably pretty fair because it hits anybody who has a car in Kent, and it’s not just the homeowners who get penalized more than anybody else,” one woman said during a question-and-answer segment of the budget meeting. “So I would say no to raising the property taxes but I would go for the car tab.”

Kent resident R.C. Sample told the mayor cuts need to be made in the city budget.

“Stand up, take charge and cut it,” Sample said. “I would look at the budget line by line and say gone, gone, gone – just like I take away my expenses at home.”

Sample said, however, he didn’t want cuts to the police department.

“It’s not going to be at the expense of our police department – it will be in other places,” Ralph said. “We have patched it, it’s time to stop the patching and fix it. But that means we can’t do everything we’ve been doing.”

City voters will consider a 2 percentage point jump in utility taxes on the April 24 ballot to pay for more police officers. The city tax on electric, natural gas, cable and phone bills would go to 8 percent from 6 percent, a change of 2 percentage points but an actual 33 percent hike in costs.

City financial staff estimated a typical family of four household would pay about $136 more per year in utility taxes based on a current average of $570 per month in utility bills.

If approved, the measure would bring in about $4.8 million per year to hire 21 more officers over the next three years, boosting the force to 180 members. The funds would be dedicated to the police department and not used to balance the general fund budget or make up for lost revenue.

One West Hill resident asked about the potential to sell the accesso ShoWare Center. The city-owned arena has lost money each year since it opened in 2009, losses covered out of the city’s general fund.

“You keep putting more money into it all of the time and it doesn’t seem to come up to what it’s costing us to run it,” the man said. “Maybe you want to consider selling the ShoWare Center – that might be a way to alleviate some of your money problems.”

Ralph responded the council has talked about options with the arena.

“It’s a conversation that as a mayor and city council we have had,” Ralph said. “We have looked at the what the debt is on the building, what we can sell it for and who are the willing buyers out – that is kind of the million dollar question. It’s a debt of about $80 million, so who would pay for the facility. It is a conversation we have had.”

Ralph will meet with city department heads starting in June to discuss their budgets.

To submit comments online about the city budget options, go to KentWA.gov/budgetfeedback.

Editor’s Note: The percentage point jump in utility taxes and actual percent increase have been corrected from an earlier version of the story. Information also was added about the cost of the tax increase to a family of four.