A Compounding Budget Challenge
Many of you may recall when I was sworn in on Nov. 29 of last year, I spoke of two issues.
One of the issues was the need to have a "blunt" conversation with the community about the budget projections for the next several years.
For years, the city has found clever ways to balance the budget, such as using street overlay dollars from the General Fund for balancing the budget or merging the Fire Department with Fire District 1. We have now run out of clever solutions.
When I came into office the economic forecast was for an $800,000 shortfall for 2013. Our General Fund this year is $33 million so $800,000 is a big hit, but probably doable without a huge impact on the everyday function of our local expectations.
Before the end of 2011, a recalculation showed the number of needed cuts would be closer to $900,000. Okay, still doable.
Then we began getting news on a variety of fronts that added to this projected deficit. None of them of our own doing!
News that the Legislature changed the formula for liquor tax distribution and that we should expect $211,000 less for 2013, increased our total shortfall to roughly $1.1 million.
If you haven't followed recent State Supreme Court rulings (and why would you?), "In the Matter of the Adoption of New Standards for Indigent Defense and Certification of Compliance," the Court's ruling basically will cause increased costs for cities related to the cost of Public Defenders.
The estimated cost to Edmonds is at least $135,000; which brings us to a deficit of $1.235 million.
And I'm not finished yet. Last week we received notice that we would have a boost in the Employer contribution rate for some of the state retirement programs.
Edmonds' cost for that boost annualized will be in the range of $180,000, bringing us to a current projected shortfall of around $1.415 million for 2013.
In addition, we believe we will receive a surcharge of about $56,000 from the Department of Labor & Industries to replenish the State's disability fund, bringing us to a total of 1.471 million. Let's call it $1.5 million.
Mixed in with this sad story... to help fix our long-term budget structural problems (a $3 million shortfall by 2015-16) I am considering implementing an additional $400,000 reduction this year, bringing the grand total to a potential needed reduction of approximately $1.9 million. This is a long way from the starting point of $800,000.
As I have said before in previous columns, this is not a play for sympathy, it's simply to report to you the challenges we face as a city.
I know some will say; just cut staff positions and the problem will be solved. The only fact lost in this discussion is that Mayor Haakenson saw the problem coming in 2003 and laid off approximately 20 staff members then.
On a per capita basis, our city already has fewer staff members than most cities in the region.
Can we make additional cuts? Sure, and we will. I just want to give you a "heads up" on what is coming.
And, as I said before, what is coming will involve people and programs. But it has to be done.