Burien's preliminary budget includes $1.4 million from reserves
The city of Burien would balance its 2013-2014 budget by taking $1.4 million from its fund balance, according to the preliminary budget submitted Sept. 24 to council members.
The amount of the fund balance would still remain above the council’s policy of having 10 percent in contingency reserves. However, City Manager Mike Martin warned that the contingency fund could run out by 2016 if the city does not fix its structural deficit. City staff is recommending that the council increase Burien’s general fund reserve to 20 percent by 2022.
The proposed budget totals $72.2 million in all funds with $44 million for the general operating fund.
Martin told lawmakers that two main factors are preventing the city from matching outgoing expenditures with incoming revenues without dipping into reserves.
The ongoing recession has “decimated” property tax revenues because of declining home values, Martin said. The city expects to lose $1.7 million in property tax revenues during the two years of the upcoming budget cycle. City officials estimate Burien lost an additional $467,000 in property taxes this year.
Unlike other revenue sources, property taxes are capped each year unless voters approve a levy lid lift. Normandy Park lawmakers have placed such a levy lid proposition on the November ballot. News reports have said Normandy Park might have to become unincorporated or annex to Burien or Des Moines if its financial woes are not fixed.
Martin said Burien’s property tax revenues will not return to 2011 levels until 2021.
“What this means is that Burien—like all cities—will continue to feel the effects of the recession, long after it is over,” Martin wrote in a cover letter accompanying the proposed budget.
The other big factor is the cost of public safety, Martin noted.
Some 57 percent or $23.1 million of the preliminary general fund budget is devoted to police services. Public safety costs are rising by almost 5 percent each year.
“Our residents have repeatedly told us that public safety is their highest priority, and you see that philosophy reflected in the budget,” Martin wrote.
The city is looking to increase revenues by increasing the Puget Sound Energy electric utility tax from 3 to 6 percent annually. That would produce $186,000 in general fund revenue over the two-year budget cycle.
The budget offered Sept. 24 did not include a 6 percent franchise fee on the distribution portion of Seattle City Light rates, which could raise $2 million in two years. Lawmakers rejected the fee increase during earlier discussions. They said it would unfairly burden City Light customers.
The preliminary budget does include an increase in the commercial parking tax from $1 to $3 per transaction. That would put an additional $100,000 into the street fund. The tax would only apply to a few airport “park ‘n-fly” lots off of Des Moines Memorial Drive South.
During the earlier discussions, council members pressured staff to find additional cuts in city government.
Because the city provides many of its services through special districts such as fire, water, sewer and libraries, Burien does not get the fees from those services to help pay operating overhead. That makes it more difficult to find budget reductions without cutting services, he noted.
However, staff did propose $861,000 in cuts. About half comes from an accounting technique for police services.
The other half was achieved by eliminating an Information Technology manager, reduced costs for producing the recreation guide, reduced costs for litigation and other fund sources.
Four staff positions were eliminated in 2012, which will save the city $1 million in 2013 and 2014.
However, the proposed budget includes three new public works positions to handle new construction in the North East Redevelopment Area. An off-ramp from State Route 518 to Des Moines Drive and a major storm water retention facility are planned in the area.
The staff proposal also budgets $50,000 for an economic development strategic plan.
Cost-of-living adjustments of 2 percent for city workers is also included in the budget for next year. Martin said he would make a recommendation in late 2013 on an additional 2 percent raise in 2014.
“Staff has only received one cost-of-living (COLA) increase in the last three years, 1 percent in 2011,” Martin wrote. “This has caused our workforce to collectively fall $202,000 behind the staff of other like-cities, obviously affecting staff recruitment and retention.”
Martin added, “The wild card in this entire scenario is the potential annexation of the majority of the last remaining unincorporated area between Burien and Seattle. Council is aware that vote will take place Nov. 6th.
“If that vote is successful, we will return to you in the spring of 2013 with a supplemental budget to recognize the addition of that area.”
The council will hold public hearings on the budget and must approve it before the end of the year.