MOSES LAKE - The Moses Lake City Council decided the city will be closing the Larson Rec Center and canceling the Moses Lake Museum & Art Center's holiday show.

The council reexamined this week new information about the REC Silicon property tax issue. The move, which will close the ice rink, BMX Park and center itself, will save the city about $125,000. A closing date for the Rec Center was not announced.

City manager Joseph Gavinski told the council the $1.3 million in property taxes from REC Silicon the city believed it would receive, will most likely not be coming after all.

It is because Grant County Treasurer Darryl Pheasant told the city he was informed by a Department of Revenue representative he was premature in sending the notice, Gavinski explained. As a result, the expected $1.3 million won't be arriving.

The issue regarding REC Silicon comes from news Gavinski shared with the council at a Sept. 9 city council meeting. Gavinski said Grant County's assessed value for REC Silicon's property was $671.2 million.

REC Silicon appealed the Grant County Board of Equalization's land value assessment, stating its property should have a value of $115 million, according to Gavinski.

The Board of Equalization placed the value at $250 million, which is a reduction in the past assessment of $421.3 million. The problem was, the city's 2014 budget is based upon the county assessor's $671.3 million assessed value evaluation of REC Silicon. Which meant the city could have lost about $1.3 million of the real estate taxation.

The tax bill Gavinski is referring to stems from news the city received on Sept. 12, regarding a hearing on REC Silicon's appeal of their property value.

The state Board of Tax Appeals ruled the value of REC Silicon's property was about $904 million. With this news, Grant County Treasurer Darryl Pheasant prepared the new tax bill for the property, billing REC Silicon about $7.6 million in additional taxes, assessments and interest for the 2013 tax year, according to Grant County Assessor Laure Grammar.

City officials thought the city would receive the $1.3 million from REC Silicon within about a month of the ruling, sparing the city of budget cuts in 2014.

Gavinski told the council the city started receiving more information from the county assessor's office about the appeal. The city was provided a motion and other materials, asking the WSBTA appeal on the decision be sent directly to the court of appeals under a process that is allowed by Washington law.

Gavinski said there was an email message from county assessor Laure Grammar, in which it appeared treasurer Darryl Pheasant was not going to re-send the bill notice he had provided.

"The only thing that we understand is that it doesn't really matter because REC isn't interested in paying those taxes at this point. They think that they really don't have to, because they believe they are correct in their appeal," Gavinski said.

The city is in the same position it was before the WSBTA's decision, a $1.3 million budget shortfall, that needs to be addressed as soon as possible.

That is why the decision had to be made to close the Rec Center and cancel the MAC Holiday Show.

Gavinski proposed borrowing about $1 million from one of the other funds the city has and re-paying the loan in the future.

Budget cuts, with only three and a half months left in 2014, would not adequately account for the shortfall in a short time period.

Where the problem comes into play however, is in 2015. REC Silicon is expected to again appeal the assessed value of their land in 2015, leaving the city with $1.3 million to account for and having to pay back the loan, if taken out, in 2014.

The city is left with a Catch-22 predicament. Gavinski told the council some layoffs may have to be considered in a variety of city departments.

"Right now Bob (Taylor) and I and the department directors are looking under mattresses, buried coffee cans, davenport seat cushions, for anything that we can find to make this work," remarked Gavinski.

There will be a budget meeting on Nov. 4 to further discuss the changes.