Commentary: Facing this financial crisis together – calling for unity between the administration and city council

This commentary is submitted from my perspective as an individual councilmember, and my views are entirely my own. The City of Edmonds is in a financial crisis and a fiscal emergency as I am writing this article; in fact, according to the 2023 Monthly Financial Reports published on the city’s administrative service webpage, the city has been using the general fund reserve and contingency fund reserve to fund day-to-day operations since January of 2023. Here is a summary of the city’s general fund reserve and contingency fund reserve required by the Fund Balance Reserve Policy and their actual deployment from January to August 2023.

Legend: 1- Dec 2022, 2-Jan 23, 3-Feb 23, 4-Mar 23, 5-Apr 23, 6-May 23, 7-Jun 23, 8- Jul 23, 9-Aug 23
Legend: 1- Dec 2022, 2-Jan 23, 3-Feb 23, 4-Mar 23, 5-Apr 23, 6-May 23, 7-Jun 23, 8- Jul 23, 9-Aug 23.

According to the proposed 2024 budget, the City of Edmonds will end 2023 with record revenues ($51.6 million) and expenditures ($56.9 million).  The expenditures have been outpacing revenues to a point where more than $2.2 million of the reserve funds will have to be deployed to cover general fund expenditures.  This trend of expenditures outpacing revenues continue into 2024 and the outyears forecasted. Upon closer study of the 2024 proposed budget, one can discover that the mayor’s proposed budget assumes Edmonds will be annexed into the Regional Fire Authority (RFA) by 2025, but council is now studying this issue further to determine what other options may be available to ensure Edmonds residents receive the highest possible level of fire/EMS services at the lowest possible cost. The administration and the city council will need to work collaboratively to look at all possible options before the RFA annexation issue is brought to the Edmonds residents for a vote.

How did we get into this financial crisis? Recent inflation is a factor; however, the fact that our city has a net gain of 47 employees in the first nine months indicates that the city administration has expanded quickly in a short period of time. Despite the repeated warnings and attempts to review and strengthen the Fund Balance Reserve Policy, the city continues to spend down reserves.

This trend of expenditures outpacing revenues can’t continue any more. The administration and the city council must unite to face this financial crisis together.  When we find ourselves in the hole, we must stop digging to expand our government. Here is a workable solution to get us out of this fiscal emergency.

First, the city council needs to declare a de facto fiscal emergency. We need to declare a fiscal emergency because the fact that the city is using reserves to fund day-to-day operations, we are in an emergency.

Second, the city council can authorize the administration to use American Rescue Plan Act (ARPA) funds for general fund usage in 2023 to get through 2023 and not start 2024 with a general fund reserve deficit.

Knowing that using ARPA funds is not a long-term solution, we now need to look at all reasonable options to control costs in 2024 and beyond to ensure our budget is balanced while continuing to deliver quality services to our residents and businesses.

As a city, we are committed to ensuring excellent fire/EMS services for our residents and businesses. Our contract with South County Fire for these services continues until 2030 (however, the RFA does have the option of terminating the contract upon a two-year notice to the city), so we do have some time to explore all reasonable options, including joining the Regional Fire Authority, establishing a contract with a different agency, or re-initiating an Edmonds Fire Department.

Third, the city council will work with the administration on a public safety levy in 2024 and possibly RFA annexation matters in 2025.

The 2024 budget is a challenging one. It requires the collaboration between the city administration and the city council more than ever to produce a balanced budget within our financial means while ensuring excellent services for our residents and businesses.

— By Will Chen

Will Chen is an Edmonds city councilmember, finance committee chair and taxpayer

  1. Net gain of 47 employees just this year somebody needs to lose their jobs starting with the mayor. Has anyone noticed a improvement in city function in the last few years are the potholes getting filled faster has there been a reduction in crime because we have more officers are the parks noticeably better maintained. I don’t see a benefit from all this government growth does anyone?

  2. Wow! Thanks, Will Chen for this info. Clearly, we can’t spend money except where needed and we can’t hire, and we may need to lay off a few too? We need EMS for sure. Get the least expensive yet still completely commandant entity. I don’t see how we could afford our own but that would be my choice. Independent. Oh boy use volunteers as much as possible. Winter is coming although the weather prediction seems like not a lot of snow but winds and rains an issue here always. We need our public service department, clearly. All the rest well hope some citizens volunteer monies for special events?? Where can we donate to help with that as private citizen? Wow! What a mess this is. Me thinks these wants got the best of our needs?? Again, Thank you Will Chen for this honest and candid report.

  3. Thank you, councilmember Chen, for being willing to recognize that the city of Edmonds is in a financial crisis. Denial is not helping the situation. Although the city is going to have to come up with a financial solution long term for EMS/Fire services, there is a more immediate “fire” that needs to be put out in the current city budget. As you suggest, looking at all reasonable options to control costs in 2024 and beyond.

  4. A big thank you to Will for his thoughtful analysis and commentary. As stewards of our public dollars, it is important to have a straightforward explanation of the current financial state of the city. A couple of big items are missing I will mention below, and between this analysis and Jenna’s LTE (also very nicely done), it almost feels like people are living in different universes. How can it be that with the above most likely being true (I have some years of experience working with Will and would have zero concerns that he does not have a full grasp on the situation), while simultaneously we are exploring and having community meetings about the single biggest land purchase in city history along with a massive bike loop throughout the city? Both with eye popping price tags. If we cannot even fund daily operations to maintain status quo, how can we in good faith continue considering either of these two projects? I feel like jettisoning those two ideas as soon as possible and getting back to focusing on basics needs to be the immediate next step. I sincerely hope the council and administration can mend their relationship. I hope our CMs can be more direct on what they are going to do about this. I suspect tomorrow’s meeting will clarify some of that.

  5. Wow! Why the heck are we considering an intriguing but expensive bike path connecting the city and a huge expenditure for the Burlington Coat Factory property when we can’t pay our bills without dipping into our emergency fund?

    If this was 2008 I could understand spending into the reserves, but it’s not. I would like a mayor who shows up to the budget workshop meetings and works side by side with astute council members like Will to get us out of this mess. I’m voting for Mike Rosen.

  6. Thank you Will Chen….this probably wasn’t easy to post. I agree with the other comments and Jennifer – what the heck are we doing thinking about adding nice but unnecessary expenditures. No!

  7. Mr. Chen, thank you for your strength of character in sharing your sound financial thoughts here. You are a true asset to the entire city and citizens. It is duly noted and appreciated.

  8. Wow! This report is an eye opener for sure. I so love living in Edmonds and want to see this city thrive but we cannot have deficit spending! How can we consider purchasing more land when there are not the dollars to support it? It is hard to believe that there were 47 new people added to the payroll this year. Also, how many trucks does Edmonds have? When I drive from EWHS down to the waterfront, I can easily see 8-10 of the city’s new white trucks. We must be wiser in our spending.

  9. Excellent high-level perspective Council Member Chen. This should give us all food for thought.
    As citizens and taxpayers, we should all be very concerned about the level of unbridled spending that is happening at local, state, and federal levels. It is not sustainable! I cringe every time I hear that we are using ‘grants’ for routine expenses. Where do folks think this money is coming from? Trillions of borrowing at the next levels up. We appear to have no understanding between the “nice to haves” and “needs”, especially at the local level.

  10. It would be useful to know what those additional 47 new employees were hired for. While more police might be a good idea, how many were hired to fill truly essential roles?

    1. The public can track the hiring activity by reading the related committee meeting packet materials. The relevant committee is called ‘public Safety, Planning, Human Services, Personnel.’ For example, see page 183 of the packet for the Sept 12, 2023 meeting to see the status of the job openings.
      All City meetings are listed on this schedule : http://edmondswa.iqm2.com/Citizens/Calendar.aspx

      Periodically, the city council receives the ‘big picture’ report. For example, a decision packet for the 2024 budget reported the hiring + resignation figures that equate to the net add of 47 positions through September.

      New positions were pretty heavily debated during the budget development sessions last Nov – Dec. The Council wanted to be sure there was a sufficient revenue stream to fund the wages + benefits of a new position, and refused to fund a position with one-time funds. Even with that budget philosophy, here we are in Oct without the revenue stream in the general fund to fund City operations.
      Why does it take so long to close the books each month? We are having this discussion with the Aug financial reports, not the Sept reports.

    2. Shocking!!! And how many unfilled positions are there? I cannot believe what I just read. I want new leadership.

  11. I have to agree with Nathaniel Brown. It’s one thing to know the cost of something, but unless we know the value of what we are buying, the analysis is incomplete.

  12. Readers, see also the article in MEN about the school district discussing their desire for 2 bonds issues for the 2024 ballot at their regular meeting tonight (Oct 24). If the City has a public safety bond levy on that same ballot, the voters are going to be making some tough choices.
    And the proposed purchase of the Burlington coat factory site and adjoining vacant land will have to close not too long after that Nov. 2024 vote. Will the City propose yet another bond on the Nov 2024 ballot to finance the purchase of those parcels and the ‘mega money’ it costs to build the future buildings?
    Edmonds has had fairly stagnant housing growth for decades and it was easy to meet the modest growth requirements that we were allocated by the regional planning organization. But the game has changed. We are now required to plan for a 30% population growth over. The next 20 years. If you think this month’s financial analysis discussions are contentious, wait until 5-10 yrs from now when the timing of expense needs is drastically out of phase with the new revenue flows. Can Edmonds copy a governance technique from Shoreline and convene a “citizens long term financial sustainability council”?

  13. I hope people remember this city council has raised taxes and spent more money than in recent memory.
    It’s the tax and spend council.
    Council approves all labor contracts, and all staff additions. Council has full control of the budget and spending. , do your own research and see.
    I love campaign season, and how fingers are being pointed.

    1. Adrienne does make at least it somewhat good point about the city council. It’s time for them to say NO. No with a hiring freeze, no to the Landmark 99 project, no to the endless administration consultants and their exorbitant fees, no to the “Greenstreet” vanity project, no to social service programs that have questionable results, and no to the funding the nonsensical self-serving administration surveys.

    2. Yes, the Council authorized the funds, but it’s the mayor’s obligation and responsibility to use those funds within all the laws, resolutions, ordinances and policies established by federal, state and local jurisdictions. In this case, he has not done so and has led to using our emergency funds for General Fund expenditures without authorization.

      Don’t try to shift the blame to Council. They were not informed at any of the Council meetings on budget amendments in 2023 as to what the ramifications of adopting those amendments would be. The administration knew, or should have known that we were headed toward using emergency funds for General Fund expenditures and they failed to tell the Council. If the administration didn’t know, that’s even worse! Had the Council been informed, different decisions could have been made.

      The mayor is the one trying to scare the citizens and Council! We have a fund balance policy to protect us from the exact situation we find ourselves in. Let’s use it as it was intended. That would be the fiscally responsible thing to do. Then we can start bailing to right this boat.

      1. Thanks Jim for keeping us on track for some of our next steps. Thank to Will for outlining your professional analysis.

  14. When the Edmonds Citizen Housing Commission [ECHC] began its deliberations in late 2019, we were advised that we needed to finish our work in the one year allowed because the Planning and Development Department would need our recommendations to begin an update of the Comprehensive Plan. The ECHC did its job and submitted a completed report in January 2021. Now, fast forward to early fall of 2023. The Planning and Development Department recently secured approval for a $ 650,000+ contract to re-write [not update] the Comprehensive Plan. Almost 2 1/2 years have been squandered in “re-imagining streets,” vision surveys that do not really survey the question at hand, and plans for land purchases and bike trails that should come after the vision and Comp Plan update have been completed. The priorities of the mayor and staff are wrong headed and that is where our precious tax dollars have gone and why we are in debt. It is time manage this city by getting back to basics, including realizing that there are parts of the city east of Hwy 99, along Hwy 99, and north of Perrinville. City Council must be the adults in the room and cut spending. Raising property taxes using the banked increases should not be an option.

  15. Thank you Will for stepping-up to make sure the citizens of Edmonds know what’s actually going on with the current City Administration. It’s time for the City Council to stop the current Mayor and his Directors’ fantasy-land approach to City government at taxpayer expense. The budget crisis requires some immediate Council actions.

    1) Immediately terminate all City action on the $37M Landmark purchase including getting our $100,000 back, terminating all contractors, and requiring the Parks and Development Directors to go back and do their real jobs and stop complaining their “plates are full”.

    2) Terminate the $900,000+ contract for the Comp Plan update and re-institute a Housing Commission composed of citizens to determine how the City should implement State mandated increased housing density.

    3) Immediately institute a hiring freeze and eliminate new positions in future budgets.

    4) Implement authority and procedures to utilize citizens wanting to volunteer to help the City – – for free. For example, give the volunteer citizens in the City’s Climate Protection Committee the authority to oversee the Climate Action Plan (rather than hiring new staff). Implement additional citizen committees such as a Finance Committee to provide citizen input and recommendations on developing and MAINTAINING a balanced budget.

    5) Citizens elect a new Mayor who will collaborate with the City Council and the public.

  16. As always Joe has some really good points. Just as he does for the Marsh and our Salmon, these ideas will lead to a better tomorrow. We will never have all the money to do what everyone wants, so we will have to prioritize what we want from local govt and then decide how much we can afford. If we want more revenue (taxes and other sources) we have the opportunity to make our views known to council at tonight’s meeting during the public hearing on Revenues.

      1. AFM, not sure of the nature of your question or its tone but I will give you my answer. I first learned about BBP when we did the Strategic Plan that was approved by Council on two occasions. I think you were on Council at the time. Council also has retreats to outline the councils work for the year and on at almost all of those retreats council has discussed BBP and had Mike Bailey the former budget director for Lynnwood and Redmond speak about the virtues of BBP. I recall you talking about your experience with BBP on your State job. He also makes a great discussion about “cost of govt”. Both BBP and “cost of govt” are great ideas to help us with not only today’s budget issues but what looks like some major financial issues in the future. Our CIP has several Major, unfunded projects that are more than “wish list” items. Fixing existing damaged sidewalks and fixing the library roof leak are important. On the wish list side of things are things like a new Yost Pool, $30m and daylighting the creek by the RR tracks. $??M. So that’s my answer to what I interpret as your question. If I did not understand your question please add some words to clarify and I will try again.

        1. Sorry Darrol I wasn’t clear; that’s what happens when you’re busy busy busy sometimes you take shortcuts.

          The reason I mentioned budgeting by priorities because you and I were both encouraging and interested in our city doing this. I of course, having a great experience, being part a group determining, budgeting for a state of wash department. It would clearly defined the needs of the city that’s for sure..
          We could tell after we did that survey from the company from LaConner that citizens were interested in this participation. Alas once again, killed by previous mayor and council members with no vision.
          I like where you’re headed with this

    1. I can agree the council approves the budget but with our council they haven’t the time or expertise to vet such a complicated endeavor we/they trust staff and the mayor to be straight shooters, this doesn’t seem to be the case. We have had record revenue every year for about a decade but instead of cutting taxes council and the mayor have spent every dime. I am not here to argue whether the spending was needed but to point out under this mayor he has spent every penny plus the pandemic money and money from our reserves, for what I ask? Studies consultants new administrative positions pie in the sky projects, guess what the sewer still stinks potholes still aren’t filled and crime is worse than it has probably ever been. Somebody needs to get a grip, the gravy train is about to break down we can’t afford to keep going down these tracks. I propose a bare bones budget cut the fat get rid all these new positions rebuild our reserves and fire this mayor and probably some of the high level staff that must think they are on the top of the organizational chart. I need staff to be managers not activist for their own ideas. This the season for major budget cuts.

  17. Will, thank you for the excellent analysis. Below are some data points that are in the budget or were obtained with records requests. People should know the facts before suggesting solutions. “What problem(s) are we trying to solve?”

    Per SCF, the 2024 fire contract billing for Edmonds will be $11,631,228; down from the Budget estimate of $12,500,000. Here is how we pay for fire today.

    $1,200,000 from insurance payments for transport to hospital
    $10,431,228 from Taxes $1m home pays $676
    Breakdown:
    $4,578,000 from EMS $1m home pays $297
    $5,853,228 from GF $1m home pays $379

    Budget shows a plan to implement joining SCF before contract expires in 2030. The current rate to join SCF is $19,434,294, A $1m home pays $1,260.
    Budget data shows plan to give back only the EMS taxes and keep the GF taxes currently used for Fire. That would create a net $963 tax increase for $1m home.

    Council at latest Budget meeting discussed raising taxes. Council’s packet for tonight shows numbers for raising GF and EMS taxes by the 1% allowed by the legislature. The allowable 1% does not cover inflation. The City and SCF both say a key factor driving increased costs are the Labor costs for Union and non-represented employees.

    Revenue and Property Taxes will both have public hearings tonight. Taxpayer ideas will be welcomed.

    1. Darrol, a person at the City told me that neighboring jurisdictions don’t believe Edmonds is paying their fair share of the costs of fire and EMS services provided by South County Fire district. Have you been tracking those conversations at other city’s city council or committee meetings? I personally believe we have choices in who provides fire/EMS services, and that SCF should not be seen as holding a monopoly on this service.

  18. I want to express my appreciation for the public’s involvement in our beloved city’s management and governance, especially during this challenging 2024 budget season. It’s your enthusiasm and, in many cases, the contributions of your experience and knowledge that keeps the City Council and the Administration on our toes. With record revenues in the last couple years, the administration still managed to overspend and now rely on American Rescue Plan Act (ARPA) funds and General Fund Balance and Contingency Fund Reserve to pay for day-to-day general operations expenses.

    For the first time in the last two years since I joined the Edmonds City Council, I received a call from Mayor Nelson expressing interest in forming a Budget Task Force to fix the city financial imbalance. In the next few weeks leading up to the adoption of the 2024 proposed budget, the Budget Task Force will work hard to identify every possibility for reducing non-essential expenses to come up with a long-term solution that will put the city’s financial condition on the solid ground.

    Again, thank you for your comments and participation!

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