Tonight: Wilson meeting to discuss new financial approaches for Edmonds

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Edmonds City Councilmember D.J. Wilson is inviting citizens to attend a public meeting tonight — Thursday — to examine ways the city could improve its financial situation.  Here is a Q&A with the councilmember on what he hopes to accomplish:

Q:  You’re hosting a meeting Thursday night on the financial situation at the city and to talk about ways of changing the way the city does business. What do you have planned?

A: The core group of participants on Thursday will be the folks who took part in the 2009 Levy Review Committee. Those 65 people spent 12 intensive hours looking at all facets of what we do as a city, and they came up with a couple of recommendations:  focus on economic development and pass a levy.  This meeting will bring that group up to speed on what we’ve done in the intervening 20 months since we met, will update folks on our current fiscal situation, and then will lay out some options for changing the way we provide services in the city.

Q:  You’re using the concept of “Government 2.0” as an element of your meeting tomorrow.  Can you explain what that means?

A: Government 2.0 is the idea that people expect their government to behave differently than governments did even just a decade or two ago. That cultural change is brought on by things like the Internet, mail in ballots (which drive up voter participation) and host of other things. Add to that the economic down turn, the Eyman initiatives which force citizens to raise taxes for services by vote at the ballot, and the rise of special taxing districts for services (like the TBD, Sno-Isle Library system or the Fire District), and you have significant shifts taking place in how government is allowed – and expected to operate.  Government 2.0 is a model of government that works effectively in this new paradigm, and it is fundamentally different from earlier models of government.

Q:  Your agenda has an array of invited speakers, including Councilmember Buckshnis, who has been critical of your hosting a meeting like this while she’s leading a separate levy effort.  Does this meeting conflict with her work?

A: No. In fact, I think she’s asking a lot of good questions as part of her process, and I think this is a good opportunity for her to share some of their findings.  The bottom line for any of us is that whatever we come up with has to get at least four votes from council, and it has to get approved by the voters.  So, I want to include as many folks who want to participate as possible – including my council colleagues.  Some of these participants may not think much of me personally, but that’s fine.  They’re here because they want to help the city.  And, for us to move the city to a stable financial footing, it’s going to take a wide range of us working together for the common good – regardless of political party, regardless of whether we like each other or any of that.  This should be about our community, not personalities.

Q: What do you hope to achieve tomorrow night in just one meeting?

A: Well, the value of this group is that they have been through a lot of education already. They know the basic details of the city.  So we don’t have to spend a ton of time there.  The goal of the meeting is to bring to the group some of the ideas for structurally changing the way we provide services and see what they think. This is a smart group, so my guess is they will have more questions but I know they will be there because they want what’s best for the community. And, if there are some answers there that float to the top, they’ll let us know.

13 COMMENTS

  1. DJ’s meeting is nothing more than another attempt to make himself look good, or better than he is. He is now basically campaigning early for reelection next year. This will be tough because his record is badly besmirched with his own clumsy screw-ups and oh, so obviously motivated by his concern for HIMSELF and his ambitions, while being totally devoid of a true desire to serve the public.

    If you can’t be good, be colorful!

  2. First I applaud DJ for allowing the public to hear and discuss our issues and try to get some public discussion about our future. Several Council members have hosted town hall meetings and even offered their views on what they would like Edmonds to become in the future. They should all be applauded for there efforts. Democracy is more than standing at a microphone for 3 minutes or more, it is about gathering as much input from as wide a base as possible.

    I sit on 3 Citizen teams that work on issues that impact our city so my views are influenced by those experiences. CTAC found a way to make money for the City with our fiber optic network. The EDC is working on a number of issues that will improve the economic development of town. The current levy committee is knee deep on figuring out our revenue needs in the future.

    When the first levy teams met they generally concurred we needed more revenue. Looking at the 2007-8 budget showed us going below the recommended reserves for the General Fund in 2007. The recommended reserves at that time were a 1 month reserve or about $2.5-3m. In that budget we were at $3.4 but going down to $1m in 2008 and down to $-1.6. This is probably why the original levy teams suggested getting on with a levy.

    Council did not act but the City did. We had to find a way to not go broke. Some but not all of the things that were done included the following.
    1. Reduced head count by about 20 people.
    2. Delay hiring on several key positions
    3. Stopped spending money on street overlays. That was just under a $1m
    4. Furlough days for employees. 17 or so.
    5. Moved forward with the Fire District consolidation. The asset sale produced about $700,000 and the ongoing reduction changed from a budgeted $8m to a payment of $6.2. Other adjustments bring that savings down to something in the range of $1-1.6m

    So with these cuts, sales, and all the rest we managed to push out the budget issue to the future.

    Now the recommended reserve is 2 months which is about $5-6m. But here is the outlook for beginning reserves.

    2010 $1.3 That’s about a 15 day reserve and will below a 1month reserve of $2.5-3m
    2011 is planned to begin at about $3.4m. To see why it went up look at the cuts and sales above. That is slightly higher than a 1 month reserve while the current recommendation is to carry a 2 month reserve.
    2012 is planned to be $2.7mand then down again in 2013 to $1.3m and going to
    $-700,000 in 2014.

    So instead of going negative in 2008 with all the cuts and sales we have managed to push out going negative to 2014. Going negative means NO RESERVES. The recommendation is for a 2 month reserve of $5-6m.

    Remember that if you want new revenues in 2011 we missed that window by not passing a levy in 2010. Even if we pass a levy in Feb 2011 we would not see any revenue until 2012.

    The EDC does not have any tricks up there sleeves to fill in the void predicted and the sale of some fiber optic services, though it will help will not same the day either.

    We are lucky to have made it this far and we would not have unless it were for the hard work of the City to cut and save and sell the FD. We do have the emergency fund that is about $1.9m but council has locked that up for physical emergencies not financial emergencies. Even if they changed their mind and released that to the general fund we would still be way below the recommend reserves.

    So I applaud DJ and anyone who will discuss the full issues of our budget and figure out what our options are and what we want to do to figure out how we want to move to the future.

  3. Nice commentary Darrol.

    However, I must comment on some of your commentary as I have sat on the levy committee which many were supportive of the 1 month reserve. For the last ten years the required General reserve has been one month because the “emergency reserve” was already in place and there has been NO financial polices for decades regarding actual to budget requirements of the general fund.

    I have done extensive research in this area and only one surrounding city that I know of uses the two month reserve only because they do not have a specific emergency reserve for acts of god events which was contrary to the original Mayor Hall adminstration that also allowed for a severe economic decline in revenue. Mayor Cooper utiilized a 2002 Governmental Finance Officers Association guideline which was when we had a pretty calm economy.

    Considering the state of this economy, it would seem that we would want to utilize the best way to optomize our money and not hold an additiona $2.1MM in an non-bearing account for a two month reserve since we already have $1.9 million and $1.3 million on reserve..

    While I do not support with how Ms. Whipple stated my issues regarding this meeting created by Mr. Wilson, I think both the levy committee and the EDC are moving in the right direction and our research shows that the most important issues are 1) Clarity of the message and where the money will be spent, 2) Clarity of the Financials to allow people to see why a levy and or levy/bond issue is needed and 3) clarity to the public that both the administration and legislative body are all in support to show the public the need as it is a long term event that can be targeted.

  4. Thanks for clarifying your position on last night’s meeting, Diane. We will be posting a report from “Citizen Harry” Gatjens, who also sits on the 2010 Levy Committee, later on today.

  5. Ms Buckshnis,
    To be clear, changing the reserve requirement from two months to one month makes the budget look healthier compared to other years because the standard has been changed. Lynnwood used that kind of approach to their budget and it has come back to bite them.
    Does it really matter that other cities are doing it? Other cities are also extending the term length of their bonds to balance their budgets in the short term. Doesn’t make it responsible nor prudent.
    Constantly complaining that you do not have the financial information that you need to make a decision erodes my trust in the Council. You hoped the TBD Proposition would pass which it resoundingly did not. This Council need to pass a prudent and responsible budget and changing the reserve requirements is simple a way to add to the general fund balance with only “a stroke of the pen”. If you have done all that research, you should have a good enough basis upon which to actually start making some decisions.

  6. Thanks DJ for hosting this public meeting. 4 council members were there and 3 shared there thoughts about issues facing our town. The 3 were very candid about their views and on the important issues like Edmonds developing a StragticPlan to develop a citizen driven “road map” 3 council members outlined their support for the plan and offered their views as to why the supported the plan. Way to go DJ, Diane and Strom.

    On the reserve account issues… how can we get a list of all the Edmonds reserve accounts and find out what is in each account, what the account is intended to do, and what are the ways the account can be tapped for other purposes?

  7. The city has not had a general fund reserve policy for at least 8 years that I know of. The two years used for the Mayor’s proposed budget was simply the administration’s proposal – it was never a policy. In fact the actual reserve has been below one month for several years recently. In reality, as the Mayor described last night, the city’s total reserves are more than $6 million.

  8. DH, If our financial statements were to be clear and include all accounts which the City Council passed unamiously in April a policy to have this disclosure, all citizens could see exactly where the money sits.

  9. Here is a challenge for our Council….How about clarity in relationship to the Council’s actions relative to the budget? In each action for the the Council’s agenda, there is a financial impact section when it is applicable.
    How about passing an ordinance requiring that the amount in the budget (for that item) be shown along with the impact of that item’s passage on the balance in the budget in that area?
    An example, if the Council is considering a $5000 expenditure for X, and notes that it is to come out of the “Council Contingency Funds”, showing the beginning balance for the Council Contingency Fund (for the current budget year) and the change in the balance that item would make. (Simple subtraction).
    It is my belief that this would create a “transparency” that most citizens would find informative, and accessible. It also would not burden our Financial Department since the math is pretty easy to do.
    Any Council persons who want transparency, want to propose it?

  10. The balance of the total “General Fund” is carried forward to the following year; the components of it generally are not. For example the Council Contingency line item starts anew each year – just like expense items in the business world. It would be useful during the year, as Diane T. has suggested, to indicate the funds remaining after a proposed expenditure is deducted. Regrettably, that has not been possible for more than one year now, because the monthly financial statements have not been current. The desired “transparency” starts with the availability of timely financial statements.

  11. I am suggesting not that the reporting is against the balance in the general fund at all. I am making a more simple suggestion. That is to show the financial impact of any proposals against what the budget is for that item. Taking the budget (should it ever pass), and simply showing what any piece of legislation would do to the budgeted amount for that particular fund.
    I think it is a quite simple proposition, it doesn’t depend on the “monthly financials” but rather the simple calculation of the budget less the “financial impact” (cost) of any proposals. (Once enacted, the balance of the amount left in that budget category would change accordingly). It doesn’t require much more than grabbing the budget number from the current budget, and showing how that budget line item would change.
    Ron W., I can’t see how the state of the financial statements would be relevant to this proposal…it is much simpler than that. Just the budgeted amount and the impact of the legislation on that budgeted item. (I know that you are very familiar with the financials, and understand them much better than most…actually, your knowledge is amazing) I am suggesting something which is truly simple and understandable and could be enacted at the first of the year.
    The budget for 2011 will be whatever it is assuming it is passed and could easily be used. If $100K is budgeted for “potholes”, then when the council proposes using $10K for specific potholes, the budgeted balance would show $90K.
    Transparency of this kind would be easy to start, and is outside the current “fight” about the financial reporting standards.

  12. Diane T.

    Ok; I misunderstood your suggestion. The budget reports now show the % used for each line item, but the comparisons are to the full year budget rather than to a year-to-date budget. I’m accustomed to having annual budgets broken down by months with seasonality incorporated. That format is used for reporting actuals for Real Estate Tax and utility taxes, but I don’t believe for anything else.

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