Kent Mayor Dana Ralph proposed a status quo 2023-2024 biennial budget to the City Council in an effort to combat inflation and its impact of higher salaries and project costs.
Ralph also proposed shifting the city’s reliance on property taxes to support the ongoing operating expenses and instead use all sales, utility and business and occupation (B&O) taxes to pay for the general fund. More of the property tax revenue will pay for capital projects where a portion of the sales and utility taxes now go.
The capital resources fund helps pay for projects such as streets, parks, facilities, vehicle fleets and information technology.
“These revenue streams (sales, utility, B&O) most often reflect what is going on within the economy and should align most closely to inflation,” Ralph said as she presented her budget Tuesday, Sept. 27 to the council. “Although it will not solve the entire structural imbalance, it will lessen its impact. This shift also allows us to continue to honor our long-standing commitment to the business community by providing dedicated funding for investment in our transportation system.”
Ralph said the structural imbalance occurs each year as state law (approved by voters) limits city revenue growth from property taxes to about 1.1% each year. She said city expenses increase annually by about 2.2% which leads to the structural imbalance.
City Finance Director Paula Painter recommended at a May council workshop that city leaders shift the reliance on property taxes for the general fund. Under the current plan, 100% of property tax revenue goes to the general fund. With the proposed change, 52.5% would go to the capital resources fund and 47.5% to the general fund. Property taxes bring in 25% of the general fund revenue.
Painter warned city leaders that without any changes the city’s fund balance (now at about $44 million) could drop to as low as $18 million by 2026. The council maintains a large fund balance account to guard against unanticipated events that would adversely affect the city’s financial condition.
Ralph has proposed to use about $2.8 million of the fund balance in 2024 to balance the budget.
Labor costs are expected to jump with inflaction up as contracts with the city are tied in part to the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Seattle-Tacoma-Bellevue area, which was at 9.5% in June, Ralph said.
Those budget challenges kept Ralph from proposing any new initiatives.
“It was agreed that any budget request would be accompanied by a revenue stream or expenditure reduction to support it,” Ralph said about earlier talks with council and staff. “We collectively agreed to no new initiatives.”
The total proposed budget for 2023-2024 is $850 million, including $234 million to the general fund or about $117 million per year, which includes funding for about 745 employees. The $850 million budget includes street operating, capital resources, criminal justice, enterprise funds (water, sewer, drainage) and other funds.
Federal relief funds
Ralph included the use of $5.7 million of American Rescue Plan Act (ARPA) relief funds in the budget. The city was awarded $28.17 million by Congress in response to the impact of COVID-19 on local governments.
All funds must be obligated between March 3, 2021 and Dec. 31, 2024 and expended to cover such obligations by Dec. 31, 2026.
In June 2021, the council agreed to use $10 million to backfill revenue losses and then invest one half of the remaining dollars in one-time economic development programs, one quarter in one-time human services and equity programs, and one quarter in infrastructure projects.
Ralph proposed to use $800,000 to implement the city’s Race and Equity Division’s strategic plan. She’s using $250,000 to speed up the removal of 441 hazardous trees on park properties discovered during the city’s Park Urban Forestry Plan inventory.
ARPA funds will be used to pay for 16 staff positions, including several positions frozen during the pandemic. The jobs include four in Information Technology (IT), four in parks and four in police (no street officers).
In a 2022 budget adjustment, city leaders restored hiring five more officers after those hires were frozen the previous year. No additional officers are part of this budget.
Other budget items
• While there are no new additions to the general fund budget, Ralph wants to spend $24.5 million from the facilities capital projects fund on a new Kent East Hill Operations Center. She said the city has grown out of its downtown shops location along South 240th Street near Russell Road.
The city’s East Hill property sits south of Southeast 248th Street and Clark Lake Park, and east of 120th Avenue Southeast. Some of the Parks staff works out of modular trailers on the property that are in disrepair and in need of replacement, Ralph said.
Besides additional shop space the project will include a warehouse building for use by Public Works, Parks and Police departments, Ralph said. She another area would be dedicated to offices, locker rooms, a lunchroom, restrooms and possibly a police substation.
• The mayor proposed spending about $10 million to begin addressing the facilities needs for the aging City Hall campus. Ralph said a 2021 facilities condition assessment identified deficiencies in city facilities and highlighted the need for lifecycle work and facility modernization.
• The mayor proposed spending $700,000 to cover losses at the Riverbend Golf Complex during the pandemic. The funds will be used to address additional capital needs at Riverbend and allow it to continue to maintain reserves needed for changes in the economy.
• About $92,000 is proposed to pay for a technology called FLOCK, to be used by the police department. It is a software and hardware solution for automated license plate detection through a camera system and a web-based platform. The cameras would be placed on major roadways and city entry points and allow officers to receive a text message when a wanted or stolen vehicle has been identified by a camera.
“State-level police reform bills have made apprehending criminal suspects significantly more challenging,” Ralph said about the reasons for adding the cameras. “It will provide police with a better opportunity to locate suspect vehicles and solve crime.”
• The budget includes $906,000 per year to continue the police department’s car per officer program, where officers take the vehicles home with them. The funds would cover buying six vehicles each year.
“This program greatly improves efficiency and is a significant cost savings for the city,” Ralph said.
Next steps
The council will have several budget workshops over the next few weeks when it can make adjustments. The council is scheduled to first vote on the budget Nov. 1 at its Operations and Public Safety Committee meeting with a final adoption set for Nov. 15 at a regular council meeting.
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