State budget cuts to the city of Kent were “less painful” than what they could have been considering the budget shortfall dealt with by legislators.

Kent will need to slash about $600,000 from its budget because the state decided to keep all of a liquor excise tax for one year rather than sharing the usual portion with cities.

That decision will cost the city about $300,000 the second half of this year and another $300,000 the first half of 2013, said Michelle Wilmot, city community and public affairs director, in her report April 17 to the City Council about the 2012 legislative session.

“That’s the one cut we saw,” Wilmot said. “But with as much as $10 million at stake, the $600,000 is less painful.”

Mayor Suzette Cooke and Chief Administration Officer John Hodgson met with department heads to try to figure out where to make budget cuts worth $600,000. City staff expects to have a proposal soon about where to make cuts this year and next year.

“There isn’t the wiggle room we usually have,” Cooke said. “We don’t have any cushion.”

City officials were concerned the state might take away the nearly $4.9 million the city gets per year because of the streamlined sales tax mitigation funds and the $3.7 million it gets per year from the annexation sales tax for annexing the Panther Lake area in 2010.

“The maintaining of the state-shared revenues was the bigger piece,” Wilmot said.

The streamlined sales tax measure passed by the Legislature changed the state in 2008 from an origin-based system for local retail sales tax to a destination-based system. That cost Kent a lot of tax money with so many businesses in the city that ship or deliver goods to other areas of the state. The sales tax is now collected where the buyer purchases merchandise rather than where the product shipped from.

Kent receives money from the state to help make up for that lost revenue.

The state agreed to the annexation sales tax rebate to encourage cities to annex urban areas. Kent gets a portion of the state sales tax collected in the city to help pay for annexation costs.

Kent also received a big boost from the 2012 Legislature when it approved $7 million out of the capital budget to help fund improvements to the Briscoe/Desimone levee along the Green River.

“Getting this money given the economy is huge,” said Wilmot, who added the $7 million levee funding ranked as the largest single expenditure out of the capital budget.

State Sen. Joe Fain, R-Auburn, helped secure the levee funding.

“The levees matter a great deal to homeowners and businesses who worry about flooding throughout the Kent Valley,” Fain said. “These investments help ensure the integrity of the levees and move us down the path toward certification. Eventually this will help lower flood-insurance premiums in the area and keep the valley’s economic engine strong.”

The capital budget allocates funding for building and construction projects statewide.

The Briscoe/Desimone levee is part of the city’s ongoing Green River Levee Improvement Program. The levee protects portions of Kent, Renton and Tukwila from flooding and is between South 180th Street and South 200th Street.

City officials hope to start work on the Briscoe/Desimone levee in the spring of 2013 or later depending on additional funding for the estimated $15 million project.