LETTER: ‘City of Burien Has a Structural Financial Deficit & is Going Broke’


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To the Editor:

The City of Burien has a structural financial deficit and is going broke.

At the City Council meeting of October 22, 2012, the City Manager/Mike Martin and the City Council tried to deny that this is true. Their refusal to face the facts in the 2011 Berk Report, page ES-4, is very serious for the financial future of Burien:

Exhibit ES-3

City of Burien 2013 2014 2022 2023

Core Expenditures 24,909,000 25,785,000 34,250,000 35,607,000

Core Revenues 22,472,000 22,885,000 26,346,000 26,973,000

Net Revenues (2,437,000) (2,900,000) (7,904,000) (8,634,000)

Deficit/Surplus

as % of Expenditures -10% -11% -23% -24%

Regardless of annexation, the City will have to continue to take steps to bring revenues and costs in line in the form of a balanced budget. Because area Y does not bring in enough revenues to cover the costs of the services it needs, if annexation is approved, these deficits will be much higher.

As summarized in Exhibit ES – 3, the City’s fiscal challenges worsen over time as costs continue to grow faster than revenues…. Growth in general fund revenues, assumed under existing City tax/fee policies and calibrated to growth in the area, does not keep pace with the core costs (growing at only 1.8%)….As stated previously, a City cannot, in reality, operate with a budget deficit – cities are legally required to have balanced budgets. As with all cities, City of Burien leaders will continue to make policy choices to balance the budget each budget cycle. The result is that large projected budget deficits do not materialize. Each budget period the City Council will make incremental adjustments to the existing budget and policy structure to keep the City functioning within its means, continually holding potential larger budget deficits at bay.”

The Berk financial report assumed that Burien’s income from property taxes would grow by 2% annually and then increase to 3% by 2021. This has not happened and Burien’s income from property taxes has declined by – 8.5%. So next year Burien will lose $1million + in property tax revenue. This was not anticipated in the 2011 Berk Report or by the City. To try to fix the problem, the City claims to have cut $1 million dollars from staff services but this still does not fix the problem of the -10% to-11% deficit from the expenditures exceeding the revenues. So rather than raising taxes or further cutting staff services and outside contracts, the City Council and City Manager have gone into the City’s savings accounts to balance the 2013-2014 budget. These savings accounts are supposed to be saved for unexpected emergencies and not to pay for expected, ongoing budget expenses.

The City is clearly going broke and the City Council is refusing to do the necessary things to correct this problem. As a further problem, the City Council and City Manager have continued to pursue the Annexation of Area Y/North Highline/White Center. Area Y does not bring in enough revenues to cover the costs of the services it needs. The Sales Tax Credits that the City Manager continues to talk about will not cover the costs to run Area Y and will further cause Burien financial problems.

No matter how much the City Manager/Mike Martin, and some Council members try to deny that Burien is going broke, the information from the Berk Report and the current way that the Council is handling the budget shortfall indicate that Burien is Going Broke. Read the figures.

– Debi Wagner

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Comments

27 Responses to “LETTER: ‘City of Burien Has a Structural Financial Deficit & is Going Broke’”
  1. tripC says:

    Ok. So, assuming everything I read is fact. I arrive at the same question I have with most ‘Letters to the Editor’. What am I, you, we, to do about it? Is this not the underlying reason for this Op.? Is it not an informational letter to stir the masses into action? So what is ‘The’ action? I would like a follow up. This type of argument is made daily in the public sphere, too often light on solutions. I hope your answer is not “Burien should not annex”. This sounds typical of political ramblings to me. This may be part of a resolution, but was not clear as the topic of the letter. It seems that many a citizen has stood before, written, or otherwise voiced their opinions to the council as to the problems our City faces. Did any of you feel like you might as well have been talking to a wall? I beg you to send a more compete letter, one filled with ideas that will get our awesome City on the right path. Please though, don’t forget that wall.

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    • John Poitras says:

      The point is Trip that not only can we not afford Annexation, it appears we are going to have to raise taxes just to cover the expenses of Burien as it stands today.

      You do bring up a good point.. What can we do? Not much until we can vote in new council members that have fiscal responsibility and are responsive to the residents unlike the current majority on the council.

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    • mike says:

      Excellent point tripC. Tell everyone in area Y to vote NO. Maybe Independent White Center is going door to door like (supposedly) people for burien are doing. We should all get with IWC and do whatever it takes to put a stop to the MADNESS that is the burien manager and council. Let’s take it to the streets…

      Area Y Mike

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  2. mike says:

    I think the council and manager thought if they decided to raised taxes right before the election their coveted annexation would go down in flames. Getting the point across to Area Y residents that Burien is kicking the can down the road to avoid the inevitable is the tough part. Taxes will go up unless they get serious about cuts. Can’t see that happening until the next time around. Just blowing smoke up everyone’s kazoo. Hopefully Area Y residents will see through it and their scare tactics and vote NO on annexation

    Area Y MIke

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  3. greg fox says:

    You think this is bad, just look at your neighbor Des Moines and how they have overspent these past few years.
    They have depended on one time permit fees for a non existent highrise hotel and now are living on the edge.
    The thing is—nobody seems to care????

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  4. Ghost of Maplewild says:

    This whole situation is so frustrating. We voted for certain council members to speak up for us, but they remain silent and meek and let the majority rule. We have brought this to the attention of the council at meetings. But when we ask for answers to our questions the Mayor just tells us they do not answer questions.

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    • Jack Block Jr. says:

      Silent and meek?

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      • John Poitras says:

        I want to say that JACK is NOT meek.. He unfortunately is one of the few on the council that actually questions the rubber stamping by the majority on the council > If we had more council members like Jack we would not be in the quagmire we are in today.

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  5. On Lake Burien Minor says:

    I don’t really know the answers to these questions, but I suspect whether one believes the economy will recover sufficiently in 10 years time to generate significant growth and additional revenue makes a big difference; however. it is worthwhile to note that while Debi Wagner appears to have much trust in the Berk Report’s ability to predict what will be revenues and expenditures for the city of Burien in the years to come, her trust appears to peter out when Berk also says (with supporting numbers) that “The annexation sales tax credit would cover the City’s incremental cost of annexation.” and “The annexation sales tax credit provides the City with greater flexibility to manage expected future fiscal challenges” and “Over the long-term, annexation would be a fiscally NEUTRAL proposition to the City”, etc. So, anybody else wonders why Debi Wagner’s trust in the Berk Report methodology oddly stops short of what would show the PAA to be revenue neutral in the long term?

    Berk Report: http://www.burienwa.gov/DocumentView.aspx?DID=1961

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  6. Fred says:

    To On Lake Burien Minor-

    Clearly you have not read the Berk Report or read this letter and comprehended it.The Berk Report never stated that the sales tax credits would cover all the city’s incremental costs for annexation over the long run. In fact the Berk Report seriously questions how Burien is going to handle things after year 10. Because at that point, the City will have a – 25% deficit and no funds to cover the real costs of both areas. Additionally, the Berk Report warns about the $77 million dollar debt that Burien will inherit will Area Y and have no funds to take care of this debt with. When the Berk Report was done it assumed that property values would continue to rise-as Debi notes in her letter. But they haven’t . They have really dropped -17.5% in 2011 and another -9% in 2012 for Area Y.

    This means the the Berk Report is even off more and the situation is worse than the Berk Report stated. With this drop in property values, the annexation of Area Y is in no way fiscally Neutral for Burien. Debi refers to that in her letter.

    To tripC-

    What citizens should do about this situation and the Council? Flood the Council with emails and phone calls about what you think they should do-complain. Go to a City Council meeting and speak out. Call a Council member and ask to have an in person meeting with the Council member. Write a letter to the local media source and complain. Vote to change the Council members who are dead beats and who constantly worry about missing their Monday night football or who don’t want to work past 9pm on Mondays-that is Robison, McGilton, Clark and Bennett. Three of them will be up for re-election in 2013. Vote against those three. Support the Independent White Center PAC in this election.

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  7. Tax and Spend Debbi? says:

    Are you then advocating that you want to tax and spend, Debbi? That seems to be the solution you are offering.

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    • Debi Wagner says:

      Tax and Spend Debbi, are you kidding me? How do you twist that conclusion into this letter?

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  8. Coverofnight says:

    Thank you Debi for your letter and being an advocate for responsible, effective government. My first thought was that this needs to be posted on the White Center blog; turns out that it is……then I noticed that we have 11 comments here (as of this writing), but NONE on the White Center blog! I hope there’s not some Chicago-style suppression of opinion going on within that voting bloc!

    While all these costs figures are just estimates, in over 30 years of construction, I’ve never seen an estimate projected beyond a year that’s been met – they’ve ALWAYS increased……the annexation costs will be no different unless we get rid of martin, get rid of unions and 3/4 of this council. And while we’re at it, just say “no” to lawyers and Joey Moretaxes!

    Shine on, Debi!

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  9. Neil says:

    Yes, thank you Debi. You and John Poitras are tireless advocates for our city. I have never felt so hopeloss as a resident of this city as now with this forced annexation insanity. Unfortunately our hopes for salvation lies within our neiqhbor in White Center. Here is a hope and a prayer that they vote no on the annexation and save Burien and themselves from financial ruin that is to come with this union. Please Debi do run again in the next council elections, You have my support both financially and boots on the ground.

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  10. On Burien Lake Minor says:

    Fred says: “Berk Report never stated that the sales tax credits would cover all the city’s incremental costs for annexation over the long run.”

    I never said it would do so over the long run (yet, you have the audacity to question my reading comprehension). I said the report claims that annexation is a fiscally neutral proposition over the long term. Whether it is correct, I do not know.

    Fred says: “In fact the Berk Report seriously questions how Burien is going to handle things after year 10.”

    Not really, the gist of the report is that yes, Burien has a present day fiscal challenge that is pressing but annexation will help the city face this challenge for the 10 years to come, and annexation will have little to no effect on balancing the budget after 2023. So, if anything, it appears that annexation would help us transition toward balancing the budget (again, according to the report).

    Fred says: “Additionally, the Berk Report warns about the $77 million dollar debt that Burien will inherit will Area Y and have no funds to take care of this debt with”

    ? I didn’t find anything about a $77 million area Y debt in the report. It does mention that Seattle estimated $77 million in deferred maintenance, which Burien estimates at $25 million over 5 years. Are you sure you read the report?

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    • Debi Wagner says:

      I use the 77 million deferred maintenance figure from the Seattle financial feasibility study rather than the Berk 43 million for two reasons. First, this 77 million figure was taken from current county estimates, field observation with the county and historical data and is the low estimate with the worst case above 91 million. This figure was the primary driver behind Seattles rejecting annexiation of the area any time in the foreseeable controllable future. The second reason is I don’t trust the Burien supplied figures in Berk or the justification for the vast difference between the two cities estimates because Burien has a motive to not be objective. Further, reading the Seattle report and comparing the two, it is clear Burien has several costly missing elements besides their obvious underestimation. As for your notion that annexation will somehow aid the cities ability to balance it’s budget let me make it simple, if you start with negative 2 and add another gigantic relatively unknown negative, each of these representing the areas current situation, Buriens deficit and area Y inability to sustain itself in millions you still have a negative but instead of 2 it is now bigger with area Y deficit added. If you get 5 million and spend it all on area Y as required by law you still have negative 2 for Burien and a somewhat lesser unknown deficit for area Y still unaffordable at 43 million if you prefer Berk. Five million isn’t even going to scratch the surface of the needs of the area.

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      • On Lake Burien Minor says:

        Thank you for your response Debi. You obviously have a more comprehensive criticism of the Berk report than what appeared in your initial letter to the editor. Many of the points you bring up ring true and I’ll need more info to form a definite opinion, in particular what have been the responses of the council to the points you mentioned. I would encourage you to provide links to any material that support your argument (do you have a webpage summarizing your findings?). For the record, I am for annexation mostly for the sake of area Y residents unless it were significantly damaging to the Burien community.

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  11. John Poitras says:

    I want to add that the Berk report is out of date and does not reflect the reduction in property values and property tax revenue of over 20% since the publication of over 20% of what will now be unrealized revenue.
    Also the Berk report is fundamentally flawed because it is by no means comprehensive enough.
    The claim that the city manager makes is that the Berk report IS the business plan for annexing white center is frankly laughable. However this flawed report is all we have to work with for now. If annexation goes thru and the true costs are uncovered I hope that heads will roll.

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  12. jimmy says:

    can someone give me the 10 mins of my life back that i just wasted reading all this crap same crap every week from same people i guest this is politics at it best post a letter to the editor then troll for comments it kinda like what little kids do on forums and youtube comments sections its nonsenes we have all herd all of this already about 50 in the past year if not more when will it stop nov 7 i doubt it damit now i wasted another 10 mins iam out of here for now

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    • Hotrodgal says:

      in a nutshell.

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      • elizabeth2 says:

        @Jimmy – While I agree with you that this has become very tedious reading the same angry comments from the same people, may I offer a suggestion.

        Don’t read it and you have your ten minutes back.

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    • Coverofnight says:

      Jimmy, you read it because you care…..that’s what an informed electorate does; remember, your vote does count in November.

      So, vote early and vote often…..oh wait, that’s the democrats’ line…..I meant, “Don’t forget to vote” – it’s the American way.

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    • John Poitras says:

      Why don’t you write a letter to the editor and include some facts and figures because that gives us something to dispute.. ALL you do on here is gripe about people that actually do the research and who are willing to share.. Apparently you are one of those low information voters who acts without considering the pro’s and con’s. I and others have asked you to do so a number of times but we are still waiting..

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  13. John Poitras says:

    Gill:
    Another fact check on that NHUAC letter.. They claim that if Area Y joins Burien that they will be a little more than half the population of Burien.. Trying to indicate that they think they will have a big voice in government.. Problem is that claim is false.. They will be around 1/4 the population if annexation is passed according to the city website.

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  14. Barbara Dobkin says:

    The letter sent by NHUAC states, “If we join our neighbors who annexed to Burien in 2010, we will be slightly more than half the population of Burien”. Last annexation, 14,000 + this annexation 17,000 = 31,000.

    Mr. Poitras, you might want to correct your comment as facts are important to us.

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    • John Poitras says:

      That is NOT what you IMPLIED in your letter Ms Dobkin .. You are as usual MISLEADING everyone you talk to with your propaganda. FACTS mean very little to you as evidenced by the doorbellers you sent out to AREA Y telling they they had to vote for annexation or they would be forced to join Seattle without a vote.
      In fact the former area X is part of BURIEN NOT part of White Center and YOU do not represent it.. These people know all about the reality of the current Burien government.

      SO your IMPLICATION that if people in AREA Y voted for annexation they would have a controlling greater voice in governing Burien was totally false. In fact the whole thrust of that part of your post was hypocritical trying to divide and conquer.. Out of one side of your mouth saying we need to join in ONE happy community and out of the other side of you mouth making it into a WE and THEM division of Burien.. So stop with the Pro Annexation propaganda Ms Dobkin.. facts mean nothing to you.. whats important is your Pro Annexation agenda.. I am curious what political aspirations you might have that Mr Martin or Mr Robison or one of DOWs politicos has fired up your ambition with political support. So you would continue your relentless pursuit of annexation at all costs even if ANNEXATION AT THIS TIME IS A BAD IDEA FOR AREA Y.

      I notice neither of you or any of your group has said ANYTHING to rebut the very germane comment I made that Burien could have negotiated a MUCH BETTER DEAL from KING COUNTY before setting out on this fiscally dangerous city expansion.. No insurance No safety net No guarantees from King County.. Now WHATS THAT ALL ABOUT? It wouldn’t have been such a good deal for DOW if that was negotiated would it? What does that tell an observer with any degree of discriminatory sense whatsoever?

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  15. Fred says:

    To Minor on The Lake-

    Again another reading Comprehension problem on your part. The 2011 Berk report refers and defers to the KIng County Engineering Study on the infrastructure problems in Area Y. If you look that KC study up it states the amount is $77million dollars.

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