Burien’s city council got its first look Monday at a proposed mid-biennium budget increase made possible by one-time federal COVID-19 stimulus funding as well as greater-than-expected revenues from sales taxes and Seattle City Light franchise fees.
“This is not your normal mid-bi,” Rebecca Hodge, a financial analyst for the city, told the council during its Oct. 4 meeting. “We are actually taking a pivot to address community and city needs due to the stronger than anticipated financial position.”
For the current year, staff are proposing a 12 percent General Fund spending increase of nearly $3.6 million. For 2022, an additional $3.5 million in spending is proposed, representing an 11.6 percent increase over previously budgeted expenditures.
“This is council’s budget,” said City Manager Brian Wilson. “We have tried to craft this recommendation consistent with the priorities that council has established.
“Probably the biggest success,” Wilson said, is the recommendation to increase the city’s Capital Partnership Reserve from $7 million to $9 million to pay for work related to planning and constructing a maintenance facility for use by public works as well as parks, recreation and cultural services.
Money received through the American Rescue Plan Act (ARPA) could be used to pay for many recommended expenditures in both years, including new hires, network security infrastructure enhancements, a cyber security risk assessment and contracted downtown-area positions including an outreach care coordinator and a mental health professional.
As proposed, about $1.7 million in the city’s ARPA funds would be used through 2022, leaving about $9 million, all of which must be committed by 2024 and spent by 2026.
Councilor Sofia Aragon said she’s curious whether and how ARPA funds could be used to enhance diversity, equity and inclusion efforts at the city. As currently proposed, some $40,000 in one-time, non-ARPA funds would pay for a consultant and staff training on those topics in 2022.
Largely due to the influx of ARPA funds, the proposed budget shows a revenue increase of nearly $7.2 million in 2021 and more than $6 million in 2022, said Finance Director Eric Christensen.
“The city is in a stronger position than originally budgeted during COVID-19,” he said.
Beyond ARPA in 2021, Seattle City Light franchise fees have generated some $320,000 thanks in part to a rate increase approved by council in 2020, human services has seen nearly $570,000 in grant revenue and sales tax revenues are “on track to be the highest year ever in the city” at nearly $1.16 million.
Nevertheless, near-term financial risk remains due to the continued spread of COVID-19 and the resulting impacts to businesses and consumer behavior, Christensen said. On top of that, the city’s financial model remains structurally imbalanced, meaning rising expenditures are outpacing limited revenues, which becomes particularly stark after ARPA funds are taken out of the equation.
“There is a need to reassess the financial position in 2026,” Christensen said. “Without any expenditure reductions, revenue increases or a combination of expenditure reductions and revenue increases, the city must rely on its fund balance to offset the operating deficits.”
In response to this same concern, as well as the impact of losing about $1 million annually with the expiration of the annexation sales tax credit, the city council in 2020 tied annual automatic rental housing inspection fee increases to the consumer price index, approved a doubling of business license fees and adopted an 8 percent tax on water-and-sewer utility providers.
During Monday evening’s meeting, the council unanimously approved an expansion of the city’s utility tax relief program to include water-and-sewer utility taxpayers, among others, including those who are indirectly billed for utilities by landlords or others. The changes generally aim to make the program more accessible, especially considering that participation is currently “very, very low” at 75 to 90 households participating annually, according to Administrative Services Director Cathy Schrock.
Looking at the city’s financial situation in 2026 and beyond, based on projections through 2030 that assume no changes to revenues or expenditures, the city can expect an operating deficit of $556,000 in 2026, growing to $2.8 million in 2030, as well as the depletion of the city manager’s reserve fund in 2029.
Though staff are not recommending actions to boost revenues or cut expenses as part of this year’s mid-biennium budget update, they did acknowledge some options for council consideration, such as a further increase to the water-and-sewer utility tax and an increase in the business-and-occupation tax.
Staff also noted several voter-dependent revenue options, such as a public safety sales tax, a property tax levy, a metropolitan parks district and an increase in utility taxes specific to telephones, cell phones, electricity and natural gas.
“I think it’s clear that we need to work to address enhancements to revenue that is not solely based on placing revenue increases on households but that focuses on economic activity,” councilor Kevin Schilling said, calling for an increase in housing development to bolster property tax revenues as well as an increase in business activity to fuel sales tax revenues.
“We need to enhance those revenue sources because they’re the two main revenue drivers of municipalities,” he said.
Changing single-family zoning to allow for greater density is key to increasing housing options and stimulating local business activity, Schilling said, noting that he is not currently in favor of a property tax levy in light of the financial impact of the COVID-19 pandemic on homeowners.
Pointing out that Burien has not seen job growth in multiple years, Wilson agreed that job creation and economic development are needed to bolster property tax and sales tax revenues. He noted the city’s plans to pursue zoning changes in specific areas – such as at entrances to the city – to encourage higher density development, and he mentioned that the proposed spending increases include $50,000 for a commercial development demonstration project similar in concept to the city’s affordable housing demonstration program.
Schilling called that “an incredibly creative and interesting idea” that “should be mobilized and implemented as soon as possible,” noting that he is also interested in exploring a levy on undeveloped or underdeveloped commercial land.
“We have a lot of undeveloped and underdeveloped privately owned commercial property in Burien and we need to get on it,” Schilling said. “The way to nudge the owners of this property is to say, ‘Well, if you’re not going to do anything with it, we’re going to try to get you to by levying the fact that you’re not doing anything with it.”
Both councilors Schilling and Nancy Tosta said they believe the council needs to spend more time working through the current budget proposal and options for achieving a balanced budget beyond 2026.
“It’s a lot to digest,” Tosta said of the proposed mid-biennium budget.
“This is huge,” Schilling said. “We as a council need to discuss this more. If we are looking at a decline in revenues and our financial position becomes difficult, we need to as a council spend more time together.”
The council is set to continue its discussion of the proposed budget update on Oct. 18 when a public hearing on the proposal will also be held. Another public hearing and continued council discussion is set for Nov. 1, followed by the introduction of an ordinance Nov. 15 and potential council adoption of that ordinance Dec. 6.
Nicholas Johnson (he/him) is an award-winning writer, editor and photographer who grew up in Boulevard Park, graduated from Highline High School and studied journalism at Western Washington University. Send news tips, story ideas and positive vibes to [email protected].