After months of gloomy forecasts, the City Council finally looked City Hall’s elephant squarely in the eye.
City finance officials publicly revealed the depth of a severe shortfall in forecast revenues for the 2009/2010 biennial budget at a May 7 City Council study session. According to the latest figures, the city faces an estimated $5.9 million deficit that is projected to expand to $14 million by 2014.
City finance director Tracey Dunlap and finance planner Sandi Hines delivered updated numbers to an early estimate used to warn the Council of the imbalance in February.
“We haven’t seen any improvement in the level of development activity and, certainly at a national level, the economic news is not improving,” Dunlap said. “And that is true maybe even more so at the local level.”
Kirkland’s financial outlook was described in a litany of declining trends, most pointedly by a projected 9.7 annual decline in local sales tax based on April 2008 revenues.
“If this is the trend that will continue throughout the year, this would have a substantial negative effect on the outlook in ‘09 and 2010,” Dunlap said.
Under state law, the city is required to pass a balanced budget, which it does every two years. The city’s current examination of its finances is in preparation for passing the 2009/2010 budget by the end of the year.
Dunlap offered a number of suggestions on how to lessen the shortfall, including reducing city wages and benefits, altering or reducing capital improvements, tapping into city reserves and raising taxes and fees.
She also said over $2 million could be saved by eliminating “one-time” expenses, which include such things as the 4th of July fireworks, the city’s lobbyist in Olympia, money for the Kirkland Performance Center and affordable housing funding (ARCH). Some council members, however, were skeptical it could be achieved city-wide. Mayor Jim Lauinger said one-time expenditures were forecast only one year out, making future estimates on needs difficult. Councilman Dave Asher said not all such expenses are of “low priority.”
City Manager David Ramsay asked the Council for direction on how and where service cuts should be made. He said he believed significant cuts were necessary to make for an average 5-percent reduction in overall expenses.
“It isn’t all or nothing,” Ramsay said.
Councilwoman Mary-Alyce Burleigh and Asher both voiced concern about cutting services funding they felt was already “below normal.”
“It’s time we let the public know we’re doing more with less,” Burleigh said.
The Council eventually settled on pursuing a strategy of both lowering services and raising taxes.
To inform and gather input from the public, it will use money it had set aside for annexation to form two focus groups and restart mailings of the city newsletter. On the issue of raising taxes, Asher was adamant the process of placing the utility- and property-tax increases on the ballot be started immediately. All city or voter initiatives must be submitted to the state by late July for state approval.
“We need to ask (the public), ‘Will you pay more to maintain the level of service?,’” he said. “We can’t fill that gap with expenditure cuts. If we miss this electorate in November, we’re not going to have another electorate like this in a decade.”
The next budget study session is scheduled for May 29.
Contact Kendall at kwatson@kirklandreporter.com.
