Arriving at a responsible city budget | Higgins

By Dennis Higgins
For the Kent Reporter

The 2013-14 biennial city budget adopted by the Kent City Council is a significant achievement: it pays down debt, holds the line on expenses, restores emergency reserves, and repairs the future financial outlook for the city.

It is the result of difficult decisions, a great deal of citizen input, and compromises. I appreciate this opportunity to explain my thinking.

In the past few years, in addition to the recession, changes in state law have permanently eroded the city’s financial foundation. These include limitations on property taxes and significantly, the Streamlined Sales Tax (SST). SST changes the way sales tax is distributed from “point of origin” to “point of destination.”

For decades, the city received robust revenues from our large warehouse and manufacturing district. SST and the recession mean a 32-percent reduction in revenue, with no equivalent reduction in the need for city services.

Local businesses and the community realize many benefits from the ShoWare Center, but the arena has under-performed financially and increased debt. The council will continue to work with Mayor Suzette Cooke and with the Public Facilities District to examine options for improving the arena’s financial performance.

For several years, city leaders have delayed confronting these budget realities. I, too, was overly optimistic that we could simply “wait-out” the problems. There was a hope that the good old days would soon return. The city depleted its reserves, deferred maintenance on parks and streets, cut more than 100 positions, implemented furloughs and eliminated cost-of-living adjustments.

This was not sustainable; in fact, third party reviewers such as Moody’s downgraded the city’s bond rating. At the beginning of 2012, my colleagues and I set out to take strong corrective action.

It does all three

Permanently fixing the city’s finances depends on three things: reducing expenses, diversifying the tax base and reducing debt. This budget accomplishes all three of these goals.

The mayor and the council have cut expenditures in this budget, including 20 positions. We reduced subsidies from the general fund toward permit and recreation fees, asking users to pay more of their share of the cost. We will be reviewing the recommendations of an efficiency study and taking further action in 2013. We welcome all suggestions for savings.

For several months earlier this year, citizens groups met to examine the backlog of street and park maintenance. Since 2008, more than 90 percent of street maintenance was deferred, and park re-investments ceased, as real estate tax revenue fell more than 70 percent. Citizens recommended that the council implement a business and occupation (B&O) tax for street maintenance, and a levy for parks and street work. The B&O was enacted, however voters chose not to support the levy. Though challenges remain, 2012 was a year of significant progress toward responsible maintenance of city infrastructure.

This budget includes a (6 percent) cable utility tax. While no one enjoys increasing taxes, the revenues from this tax will prevent further cuts to city services such as police protection.

Lastly, the council wisely chose to pay down debt and replenish reserves in this budget. In three years the emergency reserve funds will be restored, and in under 10 years, over $9 million of debt will be retired. Doing this hard work now will greatly reduce the debt burden. Future Kent leaders will be able to avoid the reactionary measures taken in recent years.

Through the repair of our financial foundation, with the paying down of debt, and with reduced spending, brighter days are ahead for the city of Kent. Our city is a great place to live, work, play, and do business. This council is determined to keep it that way.

Reach Dennis Higgins, Kent City Council president, at 253-856-5712 or dhiggins@kentwa.gov.