Citizen Harry: Questions and answers about a possible property tax levy

By Harry Gatjens

Many conversation are going on right now in the City Council about putting a property tax levy on the ballot on the near future. The council will be working hard on this subject at tonight’s council meeting.

Here are just a few of the questions that are being asked. We will look at more levy-related questions each week.

1.  I thought the Mayor already made a levy proposal?

While the Mayor can make suggestions, only the City Council can actually propose to put a levy on the ballot. The Mayor made his suggestion in an effort to get the process moving forward.

2. What is the deal with the City’s accounting?

Several council members question the accuracy of the City’s financial statements. They say they can’t support a levy until the statements are more “transparent” and delivered in a more timely manner. There seems to be little doubt that the financial statements are for the most part accurate. No worries about misappropriated funds or major discrepancies in fund balances. The issue is that the reports made to the council are not in a  format that is easy for them to understand. For the past year, this has created a climate of mistrust and heated exchanges between the administration and the council.

The problem is that if council members are continuing to question the accuracy of the City’s accounting practices, no voter can have confidence that the City really needs the extra money that they would need to pay as a result of a levy.

The City’s interim finance director said that he has reviewed the year-end 2010 statements and finds that they are within one-third of one percent of those reported in the preliminary reports provided by his predecessor, so it seems that the numbers are correct. But poor communication and lack of responsiveness to Council’s questions has led to a very antagonistic relationship. This needs to be corrected before any levy will have a chance of passing.

3. Does the City need more money for operations or for capital projects?

Both. The City currently has no money to spend to replace the surface of any roads, outside of repair work. The City is also deferring maintenance on its infrastructure and parks to the tune of about $1 million per year. It’s sort of like the old Fram oil filter commercial, “You can pay me now, or you can pay me later.” By not resurfacing some amount of roads and doing maintenance on buildings and parks each year, the city’s assets will deteriorate. If you wait too long to do maintenance, the costs of repairs will skyrocket when the things actually fail, as opposed to needing refurbishment. Most of the council supports a levy for these items as they see the need for maintenance and believe the public will too.

However, Councilmember D.J. Wilson points out that the current five-year projections show the City running at a deficit each year and actually using up all of the City’s reserves if something isn’t done to increase revenue for operations in addition to the capital projects. Some believe that the City has not yet doe enough belt tightening and there is room to reduce expenditures to reduce this need — primarily in the areas of wages and benefits. A little bit of pre-election mudslinging came up about this topic at the last Council meeting.

The truth is that both sides are probably correct. The City could negotiate more aggressively with its unions in attempt to try to gain the same sort of concessions that other governmental agencies are seeing. However, even with reductions in those expenses, ultimately the City will need more revenue or taxes.

4.  Is there really a rush to get this on the ballot?

Several believe that a levy needs to be on the August primary ballot as opposed to the general election ballot in November. They think a levy would have more chance of success as the more concerned citizens are likely to come out and vote in August. Others think the General Election in November is more appropriate as you will get the vote of a larger proportion of the citizens. Plus details just haven’t been worked out and it doesn’t make sense to rush and get a bad proposal for the sake of getting it done for August. To make the August ballot, details need to be finalized in less than two weeks. With the divisions of opinion the council showed last week, this doesn’t seem very likely.

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

  1. First of all, I want to thank Harry for putting this article together. There’s a lot going on with the levy and summarizing it in a balanced way is not an easy job.

    Regarding question 2 about accounting: I appreciate and agree with your your statement that misappropriated funds are not the issue. As a citizen, I want to know whether the city is spending it’s existing resources wisely. There are significant concerns and the Mayor seems to be stonewalling those concerns. In fairness to our current mayor, the previous Mayor was no better.

    Regarding question 3 about operations versus capital projects: I really don’t care whether something is goes into the “operations” budget or the “capital” budget. If I understand this correctly, capital projects include things we need like resurfacing to prevent more costly repairs later, and things we don’t need, like a roundabout at 5 corners. I drive through 5 corners almost every day and I understand the frustration with this goofy intersection. But I don’t see how anyone could think we should add a roundabout when we are deferring street maintenance. I think any discussion about operations versus capital is just a way to try to bore people into submission. I don’t see why it matters. Maybe somebody can explain to us non-accountants why we should care.

    I still don’t know whether we can realistically find things to cut. But I’m willing to bet that if the levy passes serious questions about cuts will be ignored until the next time we run out of money. I don’t want to see the levy fail – I really don’t. I love this city and I want to see it get even better. But if voting down the levy is the price to get the Mayor and his staff to open up about whether our existing tax revenue is being spent wisely, I’m willing to pay it.

  2. I suggest that Council members give up their medical benefits and pay (they can donate that back to the City) before asking our hard working Union members to renegotiate their salaries. Council members can ask for an exemption and get health insurance benefits, if they can show a need. As far as I can tell, our Council is composed people who have steady incomes and other sources of health insurance.

    Lead by example Council!

  3. Council already led by example when they removed family members from eligibility for insurance, and later eliminated the second half of the Mayor’s raise. Council members also are paid the lowest hourly wage of all of our public servants, if you examine their pay versus how much time is needed to prepare for the meetings. It is unfair to expect them to also give up their own medical insurance.

    Come on, Priya. I thought Joe Morgan was your hero. Don’t you agree with his statement, “But if voting down the levy is the price to get the Mayor and his staff to open up about whether our existing tax revenue is being spent wisely, I’m willing to pay it.” ?

  4. @Joan, I am opposed to asking labor to take any decrease in pay. For most Council people the pay is “extra”. For most union members the pay is enough to live on.

    Regarding Joe, I do admire him. However, I don’t necessarily agree with him all the time. I am mature enough to realize that a person has admirable qualities even though I may not agree with them 100 percent of the time.

    Regarding transparency, I haven’t really seen anything the City staff has done that raises my red flags. On the other hand, I have seen Council try to get away with things that would never pass muster like try to purchase the Skipper’s Property on the sly or vote on a matter they have a personal stake in.

  5. And, regarding the City books. It is my understanding that a State audit was recently done. Nothing unusual has been found. I hear a great many saying there is something fishy going on but, have not seen any hard evidence. I suggest the City hire a professional, independent auditor and put this distracting issue to rest once and for all.

    But, of course, the ney sayers will then say the auditor is in bed with the City. Why don’t we just ask the Mayor for a copy of his long form birth certificate while we are at it.

  6. Priya is spouting the same old baloney line that is often used by defenders of the city’s sometimes questionable financial actions. The point is simple enough. the State auditors are looking for violations of law. Waste, incompetency, and lack of transparency are not violations of law. While the auditors do make occasional suggestions that would improve things, the city must basically violate a law to fail an audit. Fortunately, we have not reached that level although some actions have gotten a bit close to the threshold.

  7. Just a bit of information. the State no longer has the money to fund these audits.
    So now we get to pay. I had 6 people in my Company for 5 days. $10,000 charge for just showing up. Previous to this. we only needed one person. Here is my point. The State employees. are directed to look for every discrepancy in the audit. I’m telling you that if we got through an audit clean We need to be proud of the participants.
    I have watched the budget for the past 20 years. The numbers have always added up
    for me. all you need is a calculator and 8th grade math skills.
    Dave Page

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