The Kent City Council and staff performed a high-wire juggling act during the past couple of 2012 budget meetings trying to reconcile some very stark revenue numbers with the reality of running the sixth largest city in the state.
The council members met Nov. 17 and Saturday morning in a chilly City Hall to wrestle with numbers, plans, proposals and considerable concerns.
The members will meet again Dec. 6 to make a final run at a budget that can be passed.
While the members shivered, particularly Saturday morning, with the heat turned low as a cost-saving measure, they pushed and pulled the budget from every angle trying to come up with a document at least most, if not all, could live with for possibly a year, but more likely a few months before changes will need to be made.
The proposed budget has the operating budget property tax funds added in that were previously used for the fire department, about $4.9 million. The money became a hot topic during the campaign and was raised numerous times at council meetings.
Budget basics
Some of the basic addition in the city budget is a $141 million operating budget with the general-fund expenditures making the bulk of operating pie with about $59 million and $11 million directed to the Panther Lake annexation area. The state requires the city to maintain a separate budget for the annexation area for 10 years.
The largest portion of the expenditures from the general fund are salaries and benefits.
Revenues for the general fund come from property, sales and utility taxes along with other fees. According to the 2012 preliminary budget document, the projected revenues coming into the city will be down in 2012.
One of the more difficult problems for the staff and council is the lack of funds for the capital budget for streets, parks and technology that includes phones and computers.
The Chief Administrative Officer John Hodgson stated at the Saturday meeting, “since 2009 we have lost 28 percent from the general fund and 50 percent from the capital (fund).”
The top-tier math problem the members ended with on Saturday was about a $600,000 deficit in the general fund.
Taxes and fees
A number of tax increases and fee hikes were considered to chip away at the deficit and bulk up capital, including a 6 percent utility tax on cable television that finally went down, but may be considered in the future if revenue is needed.
There will be a 5 percent increase in water and drainage fees, and sewer will not be increased. These are enterprise funds meaning the fees charged pay for the all or most of the service and maintenance of the system. Water, sewer, drainage and the golf course are all examples of enterprise funds.
The members agreed to an internal tax of 4 percent on the utility fund by the general fund. The 4 percent, about $2.1 million, will be transferred from the utility fund to the general fund to for street lights and fire hydrant maintenance. The money saved in the general fund with the 4 percent will be split between street maintenance and technology.
The internal tax was a tough knot to unravel because several of the members had problems with the process.
Councilman Ron Harmon had read a statement at the Nov. 15 council meeting stating taxpayers would “be paying their water, drainage and sewage, but unknowingly funding other projects.”
Council President Jamie Perry was concerned with transparency.
“This looks not transparent,” Perry said. “How do we make this transparent?”
Councilman Dennis Higgins stated he could live with “4 percent designated to fire hydrant maintenance and streetlights.”
Harmon said he could go along if the 4 percent was moved into the general fund and specifically designated only for fire hydrants and streetlights, and the $2.1 million saved in the general fund was then used for streets and technology.
“I could be persuaded it is a prudent thing to do,” Harmon said.
The councilman had stated he wanted to see dedicated funds for streets.
Perry said she could agree if the general fund savings “goes into the technology fund.”
The issues with technology was underlined by Police Chief Ken Thomas when he noted the problems officers were having filing reports on “8-year-old desk tops (computers). This is a basic core issue. We are having a difficult time doing a basic core function. This is a big deal for public safety.”
The members could not get their arms around the 6 percent utility tax on cable television.
Higgins said he was having a “big problem going to 6 percent.”
Councilwoman Deborah Ranniger noted the city may lose millions from the state when the Legislature meets, but it wasn’t certain what the figure will be.
“If the governor is going to cut $9 million from our budget I am in,” Ranniger said. “But we don’t know that yet.”
Riverbend Golf Complex
Jeff Watling, the city Parks, Recreation and Community Service director, stated he anticipated a $300,000 loss in the ledger for the city-owned Riverbend Golf Complex.
The staff noted 2011 is the first year the debt service for the course was paid off. The loss was attributed to the weather and the economy.
The plan is to cover the loss with a short-term loan from the general fund.
Councilman Les Thomas said, “This seems like an opportune time to consider not selling, (but) leasing.”
Thomas said the course has been operating “in the red. Let’s explore some other way to involve private enterprise.”
The staff will provide the council with a document outlining the options for operating the golf course.
A balancing act
The proposal for reductions to make up the deficit was a sensitive subject because it may mean employees are laid off or hours reduced.
Some of the issues raised included a salary reduction and furlough days.
Higgins said he would consider a 5 percent salary reduction “at the upper levels.”
Ranniger said, “I would consider furloughs again. Across the boards cuts are not effective.”
She stated cuts affect not only monthly pay, but the ability to get another job and retirement.
Councilwoman Elizabeth Albertson objected to this approach stating, “This is just another crazy stop gap. We will start losing good employees.”
A document outlining cost-cutting ideas written by Thomas and emailed to the members came up during the Saturday meeting. The document originally referenced the $4.9 million levy funds, “Recently, I was asked by Councilwoman Raplee, chair of the Operations Committee, to come up with some cost-saving ideas in case we, as a city, didn’t overtax our citizens by $4.94 million a year.”
Thomas listed seven points including going to a 30-or-32-hour work week, cutting 10 percent from each department, cutting 2 1/2 positions from the mayor’s office, reducing all salaried employees, leasing the golf course to private enterprise and converting to a biennial budget.
Thomas said the ideas were not original from him but “came from the Internet.”
He said had been looking at other cities with serious budget problems, including Stockton, Calif. Thomas said after cuts to police and fire there was a sign put up in Stockton calling the city the second most dangerous city in California.
“I never want to see Kent come to that point,” Thomas said. “These may be some stop-gap measures. They are just some of the ideas out there.”
The next step will be for the mayor and staff to present to the council proposed reductions in programs, services or staff to make up the $600,000 deficit.
According to state law, the council must pass a balanced 2012 budget by the end of the year.
State cuts
Another problem looming for the city is a proposal by Gov. Chris Gregoire to cut the streamline sales tax mitigation, annexation mitigation, which Kent receives for the Panther Lake annexation, and liquor excise tax. Gregoire was trying to fill the state deficit of about $2 billion.
Initially, the city was looking at the possibility of losing as much as $9 million, but Monday the governor’s office indicated a small cut of 10 percent.
The Legislature will start meeting in a special session Monday to look at these proposals and many others to fill the state budget hole.
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