Annexation. Possible cuts in public safety. Economic growth — or lack thereof. Welcome to Budget Season, circa 2008.
In separate attempts to set expectations for dealing with county and city budget shortfalls, both Kirkland Assistant City Manager Marilynn Beard and County Executive Ron Sims spoke at about the financial health of the area and plans to meet the challenges of a smaller budget. Both cited an economic slowdown that had brought residential construction to a near-stand still and a 10 percent drop-off in retail taxes as a prime reason for the planned cut-backs.
Speaking to a paltry crowd of a half-dozen residents at a Sept. 29 City Hall “Open House,” Beard and City Finance Director Tracey Dunlap gave a detailed explanation of their plans to raise taxes, cut services and dip into the city’s rainy day fund. The changes are needed to make up for a projected deficit of up to $17 million (or 12 percent) in the 2009/2010 biennial budget.
“This is one of the more serious, perhaps the most serious, budgets I’ve worked on,” Beard said.
The city’s plan for the next two years is to reduce spending $6 million, increase taxes $4.9 million and both dip into a “rainy-day” fund and eliminate one-time expenses, raising $2.3 million.
First, a tax increase is planned in two parts: Based on the average Kirkland home valued at $500,000, the average house hold will see a $3.75 increase in their property and utility taxes for the year. Then, in 2009, voters will decide whether to raise taxes on private utilities (such as electric, cable and telephone service) by 1.5 percent, or roughly $5.90 per average homeowner. The city estimates the average household pays approximately $1,872 in municipal taxes a year.
Businesses are also asked to take on more taxes in the form of a “head-tax,” charging businesses per employee and raise $1.4 million over the biennium.
Dunlap said few municipalities have been able to stay within their budget margins and placed Kirkland somewhere “in the middle” of cities similar in size, such as Renton or Redmond. Notably, Bellevue is projecting a surplus.
All city departments are asked to propose cuts of up to eight percent, possibly affecting the employment of a number of the municipality’s 488 employees. If the 2009 voter-approved utility tax fails, the severest cuts will be made to make up the difference in expected revenue.
Funding priorities were informed, Beard said, partly by public surveys the city sent out earlier this year asking residents what they thought of the city’s performance and what their top concerns were. According to survey results, public safety came out on top. Over half of the budget’s general fund spending, used to pay for most of the city’s day-to-day operations, is devoted to public safety.
Mayor Jim Lauinger and several Council members have sworn to protect police and fire departments from cuts in the past, but both Kirkland Police Chief Eric Olsen and Fire & Building Chief Jeff Blake were asked to look for possible reductions in service.
The city will officially announce planned cuts Oct. 21.
Meanwhile, members from the local chapter of the Kiwanis Sunrisers met last Thursday to hear Ron Sims offer his take on the economic picture from the county level.
He stressed a number of positive prospects the county was still looking forward to: increasing job growth, a population boom and continued investment by local businesses in the local area. He even predicted a real estate boom in 2013. Despite a projected $90 million deficit on an over-stretched system of governance for unincorporated areas.
“No one anticipated county governments would be given so many responsibilities,” Sims said.
King County presently spends $21 million dollars on unincorporated “urban areas” and the estimated 222,000 people are the second largest concentration of people in the state, after Seattle.
Sims said he hoped to re-focus county resources on regional needs, such as controlling infectious diseases, monitoring food safety and maintaining a criminal justice system with resources to arrest and eventually jail criminals. As an example, Sims noted the county set aside $12 million for the prosecution of serial killer Gary Ridgway. When he pleaded guilty, the money was released to help pay for the six other capital cases now in county courts.
To no one’s surprise, he used Kirkland’s struggle to absorb Kirkland’s Potential Annexation Areas (PAAs) as prime example of misallocating the county’s limited resources and taking advantage of agreements under the Growth Management Act. The annexation of Totem Lake in 1974 still remains a sore point for the county after Kirkland annexed most of the businesses (and the tax revenue that came with it) but left the residential areas to the county. The area remains the city’s top business tax revenue source.
“I’ll use the Council’s own words. They “cherry-picked” that area,” Sims said.
He said Kirkland’s neighbor to the north, Bothell, has expressed interest in annexing the neighborhoods instead and that a decision must be made before the May 2009. That’s the deadline to put the annexation measure to county residents before a state refund incentive expires in 2010.
“The legislature is really unhappy with the way things have worked out,” he said. “We’re at a point where, whoever wants it, gets it.”
Kendall Watson can be reached at kwatson@kirklandreporter.com or 425-822-9166, ext. 5052.
