Citizen Harry: A closer look at Edmonds’ finances, and where we go from here

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By Harry Gatjens

Councilmember DJ Wilson on Thursday night hosted his second meeting to address Edmonds’ future economic possibilities, with about 30 people attending, including Mayor Mike Cooper, Councilmember Lora Petso and the heads of several city departments.

A link to my report on Wilson’s first meeting is here.

Wilson started the meeting with a Power Point presentation that highlighted factors contributing to the City of Edmonds’ predicament. City housing values increased during the first seven years of this century but have plummeted over the past three years, with the average home value in 2011 expected to be at $360,000, compared to almost $500,000 just four short years ago.

He then explained the allocation of property taxes that are collected: 16 percent go to the city, 62 percent go to education and the remainder goes to other entities.

Next, Wilson went over the latest projections for the city’s budget through 2016. While a balanced budget has been passed for 2011, projections show the city beginning to use up its reserves in 2012, ultimately depleting them before the end of 2015. Wilson stated that we would never get to that point, as the city would begin making severe cuts in services as early as 2012 in anticipation of the shortfalls.

He then showed projections of how much additional money the city needed in order to avoid having to make cuts. And he noted that keeping the status quo essentially meant the city’s services will reflect recently-made cuts with no funds available for major road repairs, building maintenance and other necessary items. He conservatively estimated the latter items would cost another $2.5 million annually.

The end result of all this? It would take another $6.4 million to keep the city in the black through 2105 and $9.2 million to make it until 2016. So where will this money come from?

The economy remains bad and so major improvements to the city’s revenue from sales tax, construction fees and other business-related sources is limited at best. Certainly the proposed Economic Development strategic plan should help speed these sources up, but it will be a longer-term process — which really only leaves property tax as a viable source of revenue.

Based upon the projections that Wilson provided, an additional tax of $265 per home per year would solve the issue through 2015, and if you wanted to go through 2016, the total per home per year would be $300.

So, can a levy for those amounts be passed? More on that later.

Wilson also went over the possibility of either reverse annexing its fire service or getting fire service through a regional fire authority. In these cases, the city gets out of the fire protection business and it is now provided by an outside entity that would tax you separately. Even though the city sold the fire department two years ago, it is still responsible for the service and just pays Snohomish County Fire District No. 1 as contractors to actually provide the service.

Under the two proposals here, the City would no longer be responsible for providing fire services, and that task would fall to these new organizations. The citizens would be taxed to pay these organizations directly and the City would be out of the financial picture.

How does this help the City? Edmonds no longer would have to pay $6.2 million for fire services. The city would also lose $1 million in transport fee revenue and $3 million in EMS fees but it would come out ahead to the tune of $2 million annually. Over the fine years that produces a net savings of $10 million and the budget crisis is solved.

But wait, what about the taxpayers? Well, they save on average $180 on EMS fess each year paid to Edmonds, but they now need to buy fire service from the new entities for $540, at a net increase of $360 per year. Based upon that projection, it seemed to everyone in the room that — all else being equal — a levy was a better deal for the taxpayers than the fire system alternatives.

Wilson then gave the results of two polls he had conducted in the previous few days. One was an online poll that was linked from a story on MyEdmondsNews and sent to his own mailing list, and the other was an automated poll done by telephone to randomly selected citizens of the city. Both asked the same questions but got different results.

Respondents were asked if they would support a levy of $2.5 to $3 million. Online, 46 percent said yes or probably yes and 30 percent said definitely no. The telephone survey was 30 percent yes or probably yes, 20 percent no and a greater percentage were undecided.

Another question how much confidence do you have in the City Council? The result was over 50 percent negative and very negative in the online poll and only 30 percent negative on the telephone poll.

Why the differences between the two polls? The online poll was primarily filled out by people who knew Wilson or read My Edmonds News. These people tend to be more informed and more involved about what is going on in the city. The telephone respondents could have no exposure whatsoever to the behind-the-scenes side of how the city works. They like the city and therefore they have a more positive view of the council, but they don’t know Edmonds’ financial situation so they don’t want to pay more taxes.

Complete poll results are posted here.

The final part of the meeting was the give-and-take with the audience. How did we feel about a levy? What would it take for one to pass? Almost 75 percent of the people spoke and had an opinion on what the issues were. Some admitted that they were in the 30 percent “definitely no” column as they had little trust in city government. Others felt that this has been coming for years and why does the City Council keep dragging its feet to put it on a ballot.

Wilson asked how to get the message out if the council decided to put a levy on the ballot. It was nearly universal that the council and the mayor needed to be united on the importance and need for the levy. Things needed to be clearly stated and there was no room  for exaggeration. People already feel that the councilmembers are not good stewards of our money, and the Skippers purchase and the most recent decision to pay down bonds were specifically cited examples.

In summary, city officials heard that there is a short period of time to develop trust with the citizens and develop a message. Wilson’s initial presentation was quite compelling as to identifying the needs. Now the question remains, how to spread the message and move forward.

Edmonds resident “Citizen Harry” Gatjens provides regular reports to My Edmonds News on the workings of the Edmonds city government, including the 2010 Citizens Levy Committee and the Citizens Technology Advisory Committee. Gatjens, an accountant, also offers insight into the workings of the city budget.

4 COMMENTS

  1. Nice Job, Harry. These are the same conclusions that I brought forth at the last meeting. We need a clear message to show why we need a levy. We need clear and understandable financial statements so all citizens can understand the need and we need a clear stance on the levy issues.

    A levy will probably not pass if all those three items are not met. However, Shoreline did have one dissenting Council vote.

    We will adress these issues more in detail at our levy meeting this Wednesday.

  2. If that is indeed the situation the city is in than one thing is for sure, and this is directed at the council don’t pull a stunt like last year and try to buy a property like skippers if you want a levy and need one thats fine but your not going to get your cake and eat it too. I just don’t understand how goverments can just spend money and cry they don’t have any left the washington state dot is a prime example

  3. An example of something Mike above may be referring to is using unrestricted funds to pay off bonds that occurred at the January 4th Council Meeting. The explanation was that by paying off the bonds then money can be accumulated in the REET fund to buy more parks. When we can’t afford basic necessities, we should save that money for potential critical needs.

    Thank you Harry for your clear and understandable explanations.

  4. A lot of time is sent on how to raise more money in the way of taxes. Here is a common sense solution. When times are bad, one does not take money from people who are making less money and loosing equity in their homes; this is the time when government is cut. When times do get better, how about all government entities try saving money for those slow economic times.

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