Increased sales, property tax revenue in first 2015-16 proposed Burien city budget 1by Jack Mayne The Burien City Council at its Monday night (Oct. 6) session heard that increasing sales and property tax revenues could permit city lawmakers to increase the next biennial budget over the current $72.4 million. The meeting was the first of several staff presentations of the 2015-‘16 budget and focused on the first draft of the operating budget. City Finance Director Kim Krause said the draft budget is balanced and has a surplus of $32,000 over the biennium, “much improved over the forecast that we showed you in June.” She said it is recommended that the city have two months of operating expenses kept in reserve, primarily because the city revenues are “not very diversified” which means “our city is very property and sales tax dependent.” “If we lost one of our major sales tax contributors, it would have a greater impact on our balanced budget.” Three tax sources make up 75 percent of the city budget, Krause said. Property taxes comprise 30 percent and sales taxes 33 percent of the city budget. Utility taxes bring in another 12 percent. Contingency reserves The budget proposes an “ending fund balance of $7.9 million, in case sales tax revenues were forced lower. It also includes which includes contingency reserve of $3.9 million, a capital partnership reserve of $2 million, which Krause says city staff needs to develop criteria for use of the money. The ending balance also includes an excess fund balance of $1.9 million that the City Council could appropriate over the coming two years, adding that “per Council policy (that) would be for one time uses.” It could be set aside for unexpected fiscal problems, or it could be used as matching funds for a grant for a capital project. Krause said the 69 percent of two-year budget is the general fund is “just under $45 million.” Another 14 percent of the budget is special revenue funds, including street and surface water management operating funds. Debt service is $5.1 million and the capital improvement budget is $5.7 million. “It is a very modest budget,” she said. Good news “The biggest good news we got in this budget process was the increase in our assessed valuation – it went up just under 11 percent, so our estimated assessed valuation is now $4.57 billion,” Krause said, noting that final figures won’t be available from the King County tax assessor until January. The increased assessment value allows the city to increase property tax revenues because of the 1 percent allowable under state law. Kamuron Gurol, the city manager, noted that the 1 percent cap on property taxes was a voter approved ballot measure, and that “only partially keeps up with inflation.” Sales tax revenues are continuing strong growth, she said, and a 12 percent increase was predicted during the 2014 amended budget period, but the 2013 revenues came in at an ever higher rate. “Right at the end of 2013, sales tax started to grow significantly and it has continued for the entire year,” Krause said. Gurol said the budget is not based on continue increase in the sales tax in order to be fiscally conservative. But utility taxes were a different story, she said. Those taxes, which include levies on telephone, electricity and natural gas, are getting smaller. “That is primarily due to the decline in people having land lines in their home for telephone,” Krause said. Gurol said the city does not impose taxes on water and sewer services, but “many cities do.” He added that the city’s capital improvement budget is “under funded” for a city with the problems it has and the scarce revenue. Most to police, courts “The general fund is just under $45 million and the public safety, or the services that include police, jail and our court are $25 million, or 56 percent of the general fund budget,” Krause said. “The general government, which includes the city manager department, legal, finance is 20 percent of the budget. Parks and recreation 14 percent (of the general fund) Community development, which is planning and building, is 7 percent. The general fund part of public works is 3 percent. She said the 2015-2016 proposed budget includes no new staff positions, but does include “adjustments” to some current positions. “One is the reclassification of the public information officer to a communications officer and an increase in that part time position to full time.” She said the budget includes a 2 percent “cost of living adjustment” in each of the two years of the budget.]]>