Council considering all options for 2003 budget
city council is looking at a combination of tax increases
and staff cuts to try to pull out of a financial nose dive.
We had a pretty complicated budget this year, said city manager Gary Tomsic at a November 12 public hearing on the 2003 Blaine budget. The general fund is what weve struggled the most with finding a way to bring this budget into balance.
The general, or current expense, fund represents less than 20 percent of the citys total budget but pays for most of the citys operations, from the police department to planning. Our construction projects change from year to year and those are the big dollars, said city finance director Meredith Riley, adding that those individual projects draw revenue from grants and bonds, while the citys general fund draws from local taxation.
Riley explained that this year the city had used a new financial forecasting program council member Bonnie Onyon brought back from an Association of Washington Cities Seminar. It painted a grim picture. Even holding expenses at 2002 levels the general fund plunged into the red in 2003 and stayed there for at least five years out. Our goal became to try and develop a plan to not only balance the budget in 2003 but set us on a course for the next five years to try and close the revenue expanse gap, said city manager Gary Tomsic. If we dont do that well have a budget problem every year.
In two work sessions last week city council looked at options to increase revenues and cut expenses in the general fund.
Riley said every scenario they looked at included holding expenses at 2002 levels and cutting the purchase of replacement police cars from two a year to one. The next big-ticket items were city staff members. We basically said how many people would we have to lay off to make that five-year trend work, Tomsic said. The answer is seven people. The city now employs 35.
To avoid laying off a fifth of the city work force, staff looked at ways to boost revenues, including raising property tax by the one percent currently allowed under state law, raising utility taxes or reinstituting the gambling tax. The property tax hike would only generate $6,700 and gambling revenues have decreased by over 75 percent since 1996, making a tax on that income a paltry source of funds. Obviously its a downward trend, Riley said.
Tomsic said while state law limits tax on privately owned utilities and electric utilities to their current six percent without voter approval, council has the discretion to raise the tax on other city owned utilities: water, sewer and stormwater. A three percent increase in tax on those utilities would cost the average household $3 a month and generate enough revenue to cut staff by only 2.5 full time equivalents in 2003.
Even with the utility tax increase, the staff cuts wouldnt end next year without another source of funds. That scenario works for a couple of years but then we go back into deficit, Tomsic said.
Negotiations with the citys former insurance company might lead to reinstatement of the citys policy, cancelled after the settlement with the Lummi Nation, Tomsic said. That would mean a substantial reduction in insurance costs and those dollars could stem the tide of layoffs. Right now were paying $100,000 more a year, with another insurance company, Tomsic said. Were not being penalized but its an expensive program. If we can get the old policy reinstated with the same rates it would have a very positive impact on this problem.
Councils current recommendation is to raise utility taxes, take the allowed one percent property tax increase and hold off on draconian staff cuts until next year when the fate of the citys insurance is resolved. I think its a good compromise given the terrible choices we faced, Tomsic said. There will still be a 2.5 reduction in the labor force, and Tomsic said he didnt want to specifically identify which positions would go. Were pretty far down that road but plans are not finalized, he said. Our staff is pretty nervous.
Sandy Westermayer was one of a half dozen members of the public who attended the hearing. I think the police and fire departments are not good places to start cutting, he said. Blaine is a safe city right now and, being a border town, you should look for a different place to cut.
Tomsic said that, with half of city staff working in the police department, cuts there were likely, though plans were to retain the same number of commissioned officers. They may change the work they are doing somewhat, he said. The preliminary budget shows an elimination of one office specialist position in the police department and other reductions in the city clerks office and planning and community development. Tomsic also said fire services were provided by contract with North Whatcom Fire and Rescue Services, and the city had asked that they keep the contract price at the 2002 level.
Art Lawrenson acknowledged it was difficult to look at laying off staff but it was a better option than more taxes. You need to make some tough decisions and how can you justify utility increases to the people to solve the citys problems? he asked. Onyon had Tomsic confirm that not implementing the utility tax would mean laying off at least seven city staff members in the next several years. We probably would have fewer uniformed officers and that would have a ripple effect, Tomsic said. Deep cuts to the planning department could also affect growth, as fewer staff were available to work with developers. All those things are doable but they have a deep impact, he said.
Doug Fenton felt staff and council had reached a good though difficult balance. I commend the effort thats gone into this long-range planning rather than solving this years problems and jeopardizing the future, he said. If you dont do something now it gets worse, said mayor Dieter Schugt, recessing the public hearing until November 25. Council will continue to gather public testimony on proposals to balance the budget and vote on a final package at that meeting..