The city’s draft 2024 budget was top of mind for members of the Edmonds City Council during a special Thursday night meeting.
After addressing some staff-proposed budget changes along with a few of their own amendments, councilmembers agreed that it will be necessary to roll up their collective sleeves to make the cuts necessary to ensure a stable budget in 2024.
In addition, added Councilmember Jenna Nand, “We have to have the political will to make unpopular decisions.”
In early October, the council approved a resolution declaring a fiscal emergency, which authorized the city to use general fund operating reserves for 2023 general fund expenses. That was after learning that the city’s draft 2024 budget, released in early October, had projected an ending budget fund balance of $6.64 million this year, requiring the city to dip into its reserves.
There was more disappointing news last week, when the council heard that — based on the latest third-quarter budget report — the city’s estimated ending fund balance for 2023 is $3 million. That is $3.6 million lower than projected when the budget was prepared in late summer.
With that backdrop, the council has been eyeing for the past few weeks how to reduce expenses while maintaining essential city programs and protecting existing staff. While some actions were approved Thursday, there will more detailed budget amendments to come during a special council meeting scheduled for next Monday, Dec. 4 at 6 p.m.
Councilmembers considered a motion by Council President Neil Tibbott to reduce the purchasing authority of the mayor and staff — now set at $100,000 and $50,000 respectively — by 50% unless they obtain council approval. The proposal generated questions about contract spending limits as well as a range of questions among councilmembers about unintendeed consequences. It also prompted a brief exchange between Councilmember Will Chen and Mayor Mike Nelson, when Chen talked about administrative overspending, adding “I think with new leadership, different styles, probably it’s going to be a different direction (in 2024).”
“Really?” replied Nelson, who lost to challenger Mike Rosen in the November general election. “I had hoped you would keep this respectful, Councilmember Chen, and all councilmembers.”
Chen again brought back his idea — discussed at the Nov. 21 council meeting — asking the administration to reduce overall expenditure by $4 million — but with a twist. Noting the council’s upcoming decision Dec. 5 on whether to continue studying the Landmark 99 proposal — which the city has not budgeted for and has an estimated purchase price of $37 million — Chen proposed “a tradeoff.”
“I would respectfully invite Mayor Nelson to fully cooperate with the council to find opportunity to reduce overall expenditures so that we can have funds to fund the (Landmark) project to move to the next stage,” Chen said.
City Attorney Jeff Taraday then explained — as he did last week — that while the council can make any changes it wants to the mayor’s proposed budget, including adopting Chen’s motion, “the one thing the council cannot force the mayor to do is to essentially deliver a second proposed budget with $4 million less in expenditure.”
Chen received no support from other councilmembers on his idea.
“It is our responsibility as councilmembers to make these decisions,” said Councilmember Susan Paine. “I think that there are opportunities to actually consider making some revenue choices.” Specifically, she mentioned revisiting the installation of red-light cameras and transferring $2 million from the city’s building maintenance fund to the general fund, two ideas that the council rejected earlier this month.
Councilmember Chris Eck said the risk of Chen’s proposal is that “we are actually compelling staff to make extreme choices that might not be made could we be more thoughtful with our suggestions. I think we can all agree that staffing changes should be a last resort, and to do something this broad to me, it is unnecessary when we can be more specific — and I’d actually like to see us do that work.”
Councilmember Diane Buckshnis said Chen’s “horse trading” took her by surprise. “I think it’s really shocking that he would make some sort of statement that he’s going to pass something that is $37 million just to have the mayor reduce by $4 (million). These are two separate topics.”
And Councilmember Vivian Olson added that while she appreciated Chen’s sentiment of wanting to cut $4 million, she stayed up the night before looking for line-item cuts, and only came up with $1.25 million.
“It’s not trading this for the Landmark, it’s are we going to do bonds to make sure that we can pay our bills next year,” Olson said. “Yes, we need to cut $4 million but it’s going to be a very painful process to do that.”
Councilmember Nand referred to discussions earlier in the meeting, when staff-generated budget amendments were proposed. Among those was a staff proposal to bring back the Meadowdale Preschool program — following significant public outcry — after it had been recommended for elimination after the conclusion of the 2023-24 school year. The program has experienced a decline in enrollment, with just 19 students enrolled this year — likely due to competition from the Edmonds School District, which has added preschool to some of its schools. The Meadowdale Preschool has also seen a significant increase in expenses, particularly due to payroll, and projected revenues in 2024 are just $28,500 compared to $64,956 in expenses.
Councilmembers talked about a range of options for increasing revenue and decreasing expenses — and in the end decided they were not ready to take a vote whether to bring back the program. Deputy Director Shannon Burley noted that the district preschools had more amenities and the price point between the two programs was about the same. She said that staff would work to increase enrollment at Meadowdale, but that there wasn’t much room to cut expenses since most of it was salary.
“We spent the first part of this evening discussing things like defunding the Meadowdale Preschool, which the staff had already recommended, and this council did not have the political will to do that,” Nand said. “We have to have the political will to take unpopular decisions if we want to reduce $4 million in spending within the budget.”
Chen then withdrew his motion, stating that he will support the approach to “just roll up our sleeves and go line by line.” He stressed however, that the council is committed to protecting city staff. “The intention is not to impact peoples’ jobs or careers,” Chen said.
In addition to making no decision on the Meadowdale Preschool proposal, other council action Tuesday on staff-proposed changes for the 2024 budget included:
– Approval of increases to the general fund reflecting a decision from the Edmonds Citizens Salary Commission earlier this year to increase salaries for both the council and the mayor. Some councilmembers said they would gladly give up the increase in light of the city’s budget situation, but the commission’s decision is binding and must be adopted. The cost is $38,685 for council increases and $21,904 for the mayor.
– Approval of budget changes reflected by the council’s recent approval of a utility rate increase, which will result in a net overall positive impact of $853,231.
– Rejection of proposed transfer of $30,000 from the general fund to the municipal arts acquisition fund. As part of broader cost-cutting measures, this transfer was not included in the 2023 or 2024 budgets. Department staff asked that this transfer be added back to the 2024 budget consistent with city ordinance, but Councilmember Olson proposed not allocating it for now, given the budget crunch. Council President Neil Tibbott said it may be possible to revisit the transfer later in 2024 as a budget amendment if funding allows it.
– Approval of a proposed budget from the Edmonds Downtown Business Improvement District (BID), which included some “small tweaks,” Administrative Services Director Dave Turley said. A full report from the BID is expected in January.
– Approval of Edmonds Police Department administrative staff promotions aimed at improving department efficiencies. The impact on the general fund is $50,021, and budget had already been allocated to cover the change.
– Approval of a $380,000 budget reduction for traffic impact fees based on estimates from the city’s planning department on what’s expected for new construction in 2024.
– Approval of an estimated $200,414 to cover a contract — still being negotiated — for the city’s commissioned police officers.
As for its own amendments, the council agreed to delete from the budget a $125,000 staff request to upgrade security systems in city facilities and structures, as it wasn’t clear how the funds would be used.
And it rejected by a 2-5 vote a request from Councilmember Paine to move $250,000 remaining in the city’s American Rescue Plan Act (ARPA) fund to support the city’s current contract with South County Fire for fire and emergency services.
The council on Nov. 21 approved a motion to allocate $6.25 million from Edmonds’ remaining $6.6 million in ARPA funds to South County Fire, but agreed to leave $250,000 in the ARPA account. Councilmembers Nand and Olson said they were hopeful those funds could be used for grants to assist small businesses still recovering from the pandemic.
On Thursday night, Paine — supported by Chen — argued it would be “prudent” for the council to move the funds into the fire account now, but both Nand and Olson made the case for keeping the money in the ARPA account as long as possible. If the city ends up needing the money to fill urgent holes in the budget, the councilmembers agreed they would not fight the transfer.
The council also approved $44,500 from the council’s 2023 contingency fund for a fire services feasibility assessment conducted by Fitch and Associates. The intent is to evaluate the current fire service delivery models and the efficacy of the Regional Fire Authority (RFA) proposal, an evaluation of the creating an internal fire department, and potential contractual relationship with another provider.
The firm is known to the city and the fire authority, as in 2016, Fitch and Associates issued a report that analyzed South County Fire’s services. Tibbott said the firm is “very, very data driven,”which will help the city decide the best approach for future fire service.
— By Teresa Wippel