Proposed Burien City Budget for 2013-14 Constrained by ‘Structural Deficit’
Burien council members are reviewing a proposed city budget (download PDF here) that totals $72.2 million for the 2013-14 biennium – including a $44 million general fund budget.
A second public hearing on the property tax levy for 2013 and other revenue sources will be held by the council on Oct. 22, with adoption of the budget currently scheduled for Nov. 5. By law local government budgets must be adopted by Dec. 31.
“This budget is balanced and consistent with Council financial policies, including the maintenance of a 10 percent contingency reserve,” City Manager Mike Martin said in presenting the two-year spending plan to the council last week.
But the city, facing a “structural deficit,” will need to draw an estimated $1.4 million from its fund balance as a one-time maneuver to bring the budget into balance during the biennium.
“The twin drivers of our structural deficit [are] a shortage in property tax revenue and the rapidly rising cost of public safety,” Martin continued.
“The ongoing recession has decimated our property tax revenues. In total we expect to lose $1.7 million in property tax revenues during this budget cycle, in addition to the $467,000 we lost in 2012.”
Since property taxes and their annual rate of increase are capped by state law, they “will not return to 2011 levels until 2021” even if the economy rebounds.
“What this means is that Burien – like all cities – will continue to feel the effects of the recession long after it is over,” Martin noted.
Public Safety the Top Priority
“The other significant factor driving our structural deficit is the cost of public safety that continues to rise at a rate that far outstrips our revenue sources,” he added.
City residents repeatedly say that public safety is their top priority “and you see that philosophy reflected in this budget.” Fifty-seven percent – $23.1 million – of the general fund is dedicated to police services.
These costs rise at almost 5 percent annually, while city revenues increase by a “mere” 1.8 percent annually.
“Council is aware that this is a trend that cannot continue indefinitely without drastically impacting our ability to deliver services to our residents,” Martin cautioned. “Indeed, those one-time funding sources would be exhausted by sometime in 2016 if left unattended.”
Both Martin and Finance Director Kim Krause have said, however, that annexation of North Highline by Burien, if approved by voters there on Nov. 6, will have little if any impact the structural deficit.
On the plus side, “our organization efficiency is obviously something we are proud of, and in fact has kept us solvent through the recession when many of our neighbors have had highly disruptive budget cycles,” Martin said in his written presentation to the council.
But this also presents a disadvantage since there are limited opportunities to reduce the budget without affecting city residents.
“Best Effort” at Reductions
“The budget before you is our best effort at making such reductions,” he said. “It includes $861,000 in cuts, half of which, $430,000, comes from police services” – a cut of only 2 percent in that budget because it is so large.
The other $411,000 comes from a variety of general sources, including elimination of the Information Technology Manager position. “The effect of these reductions will be the least disruptive,” Martin noted.
While four staff positions have been eliminated this year, the new budget provides for hiring a deputy director in the Public Works Department along with a civil engineer and a maintenance worker.
“The department is on the cusp of executing millions of dollars of new work in the Northeast Redevelopment Area, including a major storm [water] retention facility and an off ramp from State Route 518 to Des Moines memorial Drive,” he said.
“This work cannot be performed with current staff.”
The general fund budget also includes a 2 percent cost-of-living allowance for city employees in 2013 and a 2 percent placeholder in 2014. City employees have received only a 1 percent cost-of-living increase in 2011 over the last three years.
“This has caused our workforce to collectively fall $202,000 behind the staff of other like-cities, obviously affecting staff recruitment and retention,” Martin observed. “This budget takes a small step to rectify that disparity.”
A “wild card” that may affect this budget is the potential North Highline annexation. “If this vote is successful, we will return to you in the spring of 2013 with a supplemental budget to recognize the addition of that area,” he said. This would include both additional revenues and expenses.
Proposed general fund expenditures total $40.8 million before transfers, including $23,131,700 for police, jail and district court, $8,128,180 for general government programs and services, $5,548,770 for parks and recreation, $2,803,910 for community development, and $1,143,480 for public works.
General fund revenues include $11,100,000 in property taxes, $12,084,000 in sales taxes, $5,759,000 in utility taxes, and $3,053,000 in franchise fees.
The city council is considering an increase from 3 to 6 percent annually in utility tax paid by Puget Sound Energy electric customers, which would produce $186,000 in general fund revenue over the next two years and put their taxes on par with Seattle City Light customers.
Also proposed is a commercial parking tax increase from $1 to $3 per parking transaction at Burien’s park-‘n-fly lots along Des Moines Memorial Dr. S. The $100,000 it would generate would go into the city’s street fund.