The city’s preliminary biennial budget for 2015-2016 shows little change in spending, with most of the cost increases due to pay raises for city staff offset by the completion of major capital projects.
The budget also places a renewed focus on replenishing emergency reserve funds, as well as financing a new fire station.
The city budget of $583 million, has a .2 percent increase from the 2013-2014 budget of approximately $581.8 million
The nine percent increase in spending among the general fund, $194 million compared to $178 million in the previous budget, is offset by a drop in spending for non-operating funds, which decreased by 22 percent from approximately $146.7 million to $114 million.
Director of Finance Tracey Dunlap said this decrease in spending is the result of the completing the Kirkland Justice Center and the Totem Lake culvert. The proposed budget shifts spending towards funding a new fire station, as well as replenishing emergency reserve funds. The Kirkland Justice Center, which houses the Kirkland Police Department and Kirkland Municipal Court, was completed earlier this year. The debt on Kirkland Justice Center is $35.3 million in 30 year bonds, with debt service running through 2040.
The budget includes $3 million dollars to help pay for a new fire station that would replace Fire Station 24, which is currently run by volunteers. There is $5.2 million in debt and cash reserves that were set aside for the project by the former King County Fire District No. 41.
Though Kirkland Parkplace’s new owners recently announced plans for redevelopment, it will probably be until the 2020-2021 budget before any positive changes would show up in revenue, Dunlap said.
Kirkland City Manager Kurt Triplett previously told the Reporter that redevelopment at Parkplace or Totem Lake Malls would be a “game changer” though Dunlap stated those changes to the budget will have to wait until the effects are felt by construction, and there might even be a temporary negative impact if businesses are forced to close during that period. Additionally, the length of the construction phases would also be a critical factor.
“It would be a couple of years at a minimum before it would start to significantly affect things,” she said.
Most of the increase for the general fund is due to growth in wages and benefits, according to Dunlap, which takes up 61 percent of expenses. All staff except for non-commissioned police are budgeted to receive a 2 percent raise each year pending the settlement of union contracts. Non-commissioned police will receive a 2.3 percent wage increase in 2015.
The budget also allocates $5.3 million to their reserve funds by the end of 2016 in anticipation of losing $4 million in annual annexation sales tax credits starting in 2021. The reserves were used to help balance the budget during the Recession, and the city hopes to have the reserves filled by 2018, which can be used to help fill the budget gap if revenue does not increase.
“One of the reasons there’s such a focus on replenishing the reserves is that it offers us some hedge against global economic activity,” Dunlap said. “The big concerns really lies in the global economy where it’s outside our control. It’s another reason why we’re being reasonably conservative.”
Last year, the city brought in $16.6 million in sales tax revenue, finally surpassing the $16.5 million in 2007 before the Great Recession, albeit the 2013 figure reflects the 2011 annexation of Finn Hill, North Juanita, and Kingsgate, which nearly doubled the city’s population from 48,000 to 80,000.
Property tax and retail sales tax are expected to be the two most significant sources of revenue for the city’s budget at $35 million and $36 million respectively. Retail sales tax revenue is predicted to increase by 20 percent from the previous biennium budget.
Legally, the city is required to have a balanced budget, which is made every two years. The city currently maintains a AAA credit rating by Standard and Poors.
The budget was presented to the council during a study session Oct. 30. The council held a public hearing on it Nov. 3. The final changes, if any, will be made to the budget at their Nov. 18 meeting before it is adopted Dec. 9.
