Proposal maintains city services, closes structural budget gap
The following is the complete text of Mayor Suzette Cooke’s mid-budget adjustment proposal for 2018. Cooke presented her budget proposal to the Kent City Council during a special meeting Tuesday, Sept. 26, 2017.
“Council President Boyce, Councilmembers, City staff and residents:
Today I present my final budget recommendations to you as your mayor. But before I go into detail, I wish to thank you for your engagement. We have been through some very rough financial times – and – we have celebrated amazing achievements as we have served the Kent community together.
When it comes to budgeting, the bottom line is – we get what we pay for. There is no free ride when it comes to a quality community. It takes your thoughtful policy-making, and the public’s willingness to invest in their current and future living standards, to attain our vision as “a safe, connected and beautiful city – culturally vibrant with richly diverse urban centers.”
The budget is the cornerstone of your policy-making. This is where we put taxpayers’ money to use; where we walk the talk.
In previous years, my budget proposals included deliberate strategies for smart growth of City programs with an eye toward the coming budget challenges beginning in 2019 – 2020.
The now anticipated loss of our Streamlined Sales Tax mitigation dollars from the State in 2019 – coupled with the known expiration of the Panther Lake Annexation Sales Tax credit in June of 2020, result in a loss of at least $10 million to the General Fund. For years we have called this our “fiscal cliff.”
My previous budget proposals have included new revenues, increases to current revenues, and redistribution of Council-restricted revenues to prepare for the fiscal cliff. You said:
- “no” to using of the City’s banked property tax capacity,
- “no” to implementing a Transportation Benefit District,
- “no” to increasing the Business & Occupation tax rate (currently one of the lowest in the state), and
- “no” to redistribution of the B&O tax for other general and capital uses.
Each year you chose to “kick the can” down the road.
While the solutions I proposed weren’t easy to adopt, those choices don’t become easier if service reductions become necessary because of a failure to act. The decision to use fund balances to cover necessary and ongoing needs, such as those of our parks system, is not sustainable.
Now, let’s talk about mid-budget adjustments for 2018.
My proposal for 2018 totals $330.5 million and is an increase of $40.4 million from the adopted budget. Most of the almost 14% increase occurs in funds other than the General Fund. These are dedicated funds where those resources are required to be used for specific purposes.
Within the $330.5 million total budget, $98.6 million is allocated to the General Fund – a 4% increase – or $4 million – from the adopted 2018 budget.
The proposed budget reflects my continued commitment to providing valuable government services in a cost-effective and efficient manner, continues progress on our strategic plan, and respects the priorities of our residents.
Even with the continued – albeit moderate – economic growth the City has seen over the past couple of years, baseline resources in the General Fund were unable to cover on-going operations. And, per my direction, few new funding requests were made – – -and I approved even fewer. The requests that made it into the mid-budget adjustments were heavily scrutinized in light of the structural deficit and fiscal cliff.
The proposed budget was developed using a realistic, yet conservative approach to revenues for the upcoming year. In cases where fund balance is being utilized to balance budgeted expenses, a thoughtful determination was made by comparing the current level of fund balance to the minimum level of fund balance necessary based on cash flows and any contingency requirements for those funds. Furthermore, the use of fund balance is restricted to pay for one-time only capital or major maintenance projects – and is not used for on-going operations.
My proposed budget required the closure of a $2.3 million gap in the General Fund. This gap is due to a “structural deficit.” The City’s share of property tax collections – our largest revenue source – is limited to growth of 1% per year. Inflation is 3%. This means we could have a status quo budget every year – with no new programs, no new police officers – and still be under water.
This is where the structural problem lies. Our largest revenue source is capped at a rate that doesn’t account for inflation or population growth – it goes above and beyond the fiscal cliff. This structural deficit affected us before the fiscal cliff – and will be with us after we resolve the fiscal cliff.
To close the gap this year, I am proposing to use the City’s banked property tax. The increase in our property tax will balance the proposed general fund budget and provide much needed ongoing resources for City operations. While raising taxes is never easy, the increase for a Kent resident with property valued at $300,000 will result in a $37 increase in annual property taxes.