Covington doesn’t have enough money to fix its streets and in four years the reserves to support road projects will be gone.

This is why the city will ask voters in November to approve a transportation benefit district to generate revenue through a sales tax increase of 0.2 percent — from 8.6 percent to 8.8 percent — to fill the coffers of its street fund. If approved, explained City Manager Derek Matheson in presentation to Covington Rotary July 26, it could generate as much as $750,000 a year.

At this point, Matheson said, the street fund is expected to be short $56,000 this year. He explained in his presentation — which was intended to provide information and not advocate one way or the other, he said in a disclaimer at the start — that the recession, higher gas prices, inflation and statewide ballot measures reduced the cash flow into the city’s street fund.

“We do not pave streets anymore unless we get grants,” Matheson said. “We’re fortunate we got a couple this year. We do very little asphalt patching or crack sealing.”

Other road improvement projects that are smaller scale aren’t done unless the city receives grants for which there were no federal or state matching funds.

Matheson noted that the city’s general fund, which is also tight, subsidizes the street fund at $250,000 a year. A significant chunk of the city’s annual $9 million budget, about $3 million, goes to Covington’s police contract with the King County Sheriff’s Office. Because money is shifted regularly from the general fund to the street fund to cover road maintenance programs Covington has not been able to add to its police force despite the fact it has fewer officers on average than other contract cities in the county.

“We’ve had no new police officers since 2008 even though we’ve had significant residential and retail growth since then,” Matheson said. “Faced with this situation, we have a couple options. We can cut expenses or increase revenues.”

Covington staff has done both by reducing benefits, eliminating merit pay, offering lower cost insurance plans while renegotiating contracts for services with other entities. In an effort to find other approaches, Matheson said, the city put together in 2012 its budget priorities advisory committee.

“BPAC’s original expectation was it was going to go into the city’s budget and slash out the waste,” Matheson said.

During the course of nine months, however, the BPAC found no fat to trim. At the end of the process, one of the core recommendations to come from the committee was to put the TBD concept to voters.

Covington’s City Council members preside as the TBD Board. A TBD has a different taxing authority than cities do under state law, Matheson said. There are 281 cities in the state, he said, and 56 of them have TBDs. Of those, 14 put the sales tax increase on the ballot. The rest, like neighboring Maple Valley, chose to increase vehicle license fees. A city with a TBD can add up to $100 to the vehicle license fee, and up to $20 without voter approval.

Covington chose the sales tax, Matheson said, because it seemed clear voters do not like the vehicle license fee or increases to it.

The other advantage of the sales tax increase, if approved, is that it would be paid by anyone who spends money in Covington. The burden, therefore, would not be borne entirely by residents of the city which is appealing because it is a hub in the region for shopping and eating out.

It would expire in 10 years, Matheson said, and if the TBD Board wished to renew the tax that can be done once.

If the sales tax increase is approved in November, then the city would no longer need to subsidize the street fund from the general fund, and that money could then cover the cost of another police officer as well as increasing the hours of the code enforcement officer from half-time to three-quarters time.