The Edmonds City Council approved the 2015 budget Tuesday evening. It’s the first time a budget has been approved in at least six years that projects running at a deficit. Not that the city will run out of money, but rather for the first time the city expects to spend more money than it takes in.
How did this happen, and is it a problem?
The city has built up fairly high reserves over the past several years. However, in 2014 the general fund shows a deficit of $367,000 followed by another deficit of over $3 million in 2015. This still leaves the city with plenty of money; in fact, the general fund balance at the end of 2015 is projected to be almost $10 million.
However, two years ago the council voted to set up some reserve funds to protect the city from disasters and maintain a cushion. These two reserves are supposed to be a total of 18 percent of the city’s general fund expenditures for the year. For 2015, these reserves should be almost $6.2 million. Another three quarters of a million dollars is tied up in funds identified for specific purposes, such as building maintenance and uninsured retired employees’ medical expense. This means what should be considered usable general fund balance is under $3 million. Less than one month’s expenses.
The city’s “looking forward” projections show deficits for 2016 through 2018, totaling over $4 million. Now you begin to see the problem if we don’t begin to take control of expenses or come up with new sources of revenue.
From 2008 through 2011, much was said about the need to increase property taxes because the projections then look as they do now, only four years sooner. Thanks to belt-tightening and the delaying of some infrastructure maintenance costs, the city has had positive financial results the past three years.
Last year, the Mayor suggested it was time to spend some money and catch up on the deferred maintenance in the budget, including $1.5 million for street repairs, and also began several other projects that had been delayed for years.
The city was then hit with the bill from Snohomish County Fire District 1 for over $1.6 million in catch-up costs for labor contracts, and was told that the current costs for the Fire District services will be almost $1 million more than had been on the budget the last five years. Part of this has been camouflaged by paying the $1.6 million in catch-up costs out of the reserve funds rather than the main general operating fund. So instead of the $6.2 million mentioned above, the reserve funds, now will total less than $4.5 million at the end of 2015.
There are legitimate reasons for the increase in expenses in 2015. The increased costs for the fire district totaling $1.8 million; $163,000 for increase jail costs due to a new contract and $1.3 million for additional street maintenance in 2015. Also included was $30,000 for after-hours IT supportand $75,000 for various automation projects in the court, police and city clerk departments.
There was a savings of several hundred thousand dollars in medical costs and then the Council added there are suggested projects. $100,000 for studies (hopefully getting matching dollars from the state) on train and waterfront safety, $100,000 for highway 99 study, $20,000 for a building maintenance study and $10,000 for design of the Veterans Park.
These items total to over $3 million plus general inflationary costs on the ordinary running of the government.
All these items seem reasonable things to do, and for 2015 they don’t bankrupt the city. But if the trend continues into the future, it won’t be long until we began to face a financial crisis. The mayor and the council need be very judicious in the future before expanding the projects list.
— By Harry Gatjens
Edmonds resident “Citizen Harry” Gatjens provides reports and commentary to My Edmonds News on the workings of the Edmonds city government. Gatjens, an accountant, also offers insight into the city budget.
Don’t forget the “fluff” sink hole projects of the 5-corners round-a-bout, Main street narrowing, Sunset, etc…of course, each of these also had studies and consultants which cost lots of mullah…
But hey, who cares….we are only spending other peoples money…
My objection to 5 Corners was always the cost. It looks like those of us objecting to doing this project, due to the cost, had a very valid point of view. Reality will set in, whether we like it or not, and that reality seems to be just around the corner. Wake up Edmonds!
Harry’s insights are always informative!
It is great to have all the pieces pulled together in a comprehensive and accessible way.
There was little transparency on the Fire District One bill, and paying it from the reserves should not have been done without open public deliberations by the Council.
All the expenditures matter. The economy has picked up and instead of re dedicating efforts to fix the streets ( paving) and the funding for police efforts to deal effectively and coherently with public safety; we are looking at expensive projects like City park spray pads, multiuse pathways at Sunset, train trenches, and funding expensive studies. Meanwhile the infrastructure continues to deteriorate, the police are making do and neighborhoods outside the bowl aren’t having crosswalks done, sidewalks built and the basics done.
And the Code of Ethics has been delayed again.
Public safety has been a cry from the citizens, and one would hope a priority for the City. I would add wheelchair curb cuts that are not ADA compliant. Many around town and a number @ places with high traffic volume and speed. It is not difficult to identify such locations and I’m told only $5000 – $6000/curb, to be compliant. Is this not an example of a community priority; more important than Sunset Ave?