Help solve Kirkland’s serious budget problem
The City of Kirkland has a serious budget problem. Revenues are down. Spending is up. The economy is slowing. What is a City Council to do? You can answer this question in the opinion poll below.
The Council is considering raising taxes and cutting service levels to balance the City’s budget. This comes at the worst possible time — during an economic downturn. Kirkland has lived a fat and happy life during the good times. Now it is time for the City to tighten its belt just like we all have had to do in our personal lives. Raising taxes during recessionary period hurts hardworking taxpayers at the worst possible time.
Raising taxes and cutting service levels are not the only options. Other alternatives are available, but the City does not want to use them. One strategy is to reduce annual wage increases (currently 6%) and benefit increases (currently 10%-11%) for City employees. City wage and benefits represent 70% of the budget. It is the one place where reductions would have the greatest long term benefit in balancing the budget, yet it is the one place the City does not wish to cut.*
Personally, if I worked for the City, I wouldn’t be too thrilled with the prospect of promoting my own wage and benefit cuts. But if you don’t work for the City, ask yourself this question, “Does my job pay me annual wage increases of 6% and benefit increases of 11%?” Few in the private sector can answer yes to this question.
It will be extremely difficult to solve the budget problem without dealing with the skyrocketing costs of City wages and benefits. The City Council needs political support to make the tough decisions necessary to balance the budget. The budget cannot be balanced on the backs of the already hurting taxpayers.
Higher gas prices, mortgage rates, food, energy… the list goes on and on. Now is the time for the City to tighten its belt. Now is the time for the Council to make the difficult decisions. And they need our support.
Here are some sobering notes from the May 7, 2008 special study session on the 2009-2010 budget:
The Bad News
$10 million to $13 million projected deficit for 2009-2010 biennium (including one-time programs) The City cannot run a deficit. It must balance the budget each year.
- The City has what it calls “recurring one-time programs and current temporary positions” which include 16 FTEs and other expenditures totaling $2.8 million. These positions and programs do not have permanent funding sources. During good economic times, sales tax revenue in excess of what was expected was spent on these positions and programs. It is a strategy of adding to staff and services without having to raise taxes or cut other positions. This works fine during good economic times but it means draconian cuts are necessary now that sales tax revenue diminished. Suddenly, all of those programs and positions are left without funding.
Sales tax revenue 9.7% lower than same period last year
- in addition to no growth in sales tax revenue from 2006 to 2007, the year-to-date 2008 results through April are 9.7% lower than the same period in 2007. The 2008 budget was based on a 2% growth in sales tax revenue. Suddenly, we find that sales tax revenue to the City is severely reduced.
$800,000 to $1 million overtime expenditures for public safety
- This is a lot of money. Perhaps staffing policy going forward can address this issue. Public safety is the first responsibility of government.
The Good News
$594,134 Annexation funding remainder (how many millions of dollars did the annexation study actually cost Kirkland?)
- Since the Council concluded that to proceed with annexation was “financially reckless”, the City is ending the annexation study. To date, Kirkland has spent untold millions of dollars on annexation. Finally, we can focus on Kirkland’s problems once again as opposed to expanding the City limits. It appears the City has some change left and that will help solve the budget problem.
Now, here is an oportunity you wont get from the City — a chance to voice your opinion on what the City Council should do to balance the budget. The Council has decided not to empower the people with this question. So we thought we would help them out with our own poll.
The truth is there are no easy answers to solve the budget problem.
QUESTION: How would YOU fix the looming Kirkland City budget problem? Choose the budget option(s) you think are necessary to balance Kirkland’s budget. Select as many items as you like. The results of this poll will be forwarded to the Kirkland City Council.
Loading ...* During the 2008 council retreat, the City produced this chart showing the looming budget deficit. In the Key Assumptions, the report lists “6% annual growth in wages in 2009-2014 and 10% annual growth in total benefits in 2009-2014. These numbers are very different from the recommendations the City made in a similar report from just one year ago. This report, The Phase 1 Fiscal Analysis of Annexation, stated that City wages and benefits escalation rates would need to be cut as follows:
- The current 6% annual growth in City wages would need to be cut to 5% after 2010
- The current 10% annual growth in City benefits would need to be cut to 6% after 2010.
Now somehow, the City has forgotten about this report. When annexation was being studied, the City was willing to cut wage increases to 5% and cut benefit increases to 6% after 2010. Now that annexation if off the table, so too are these cuts from the City. One can only wonder why…
Print This ArticleRelated Articles
7 Responses to “Help solve Kirkland’s serious budget problem”
Leave a Reply
Subscribe
You can subscribe by email to receive newsletter updates:
Subscribe through a RSS feed reader
OMG! An interview with Kirkland’s Jason Mesnick from “The Bachelor”
Sponsored Ads
OMG. I had no idea the situation was so bad. Kirkland always seems to have so much money. well, maybe that is the problem. Only bad choices, but I can’t afford any more tax increases. My property taxes are so high it is difficult to make ends meet. Don’t get me started on gas prices.
[Reply]
I will like to see how people vote. It is easy to complain about problems but a totally different thing to actually try and find a solution. This is a good exercise for me. I did not know the issues here were this complex.
I don’t mind paying taxes. I think it is the just thing to do. That said I am cautious about anything right now coming from the city. They have squandered much good will over the past year in my view. Annexation was crazy for us to attempt because it was too big and now the issues for builders. Kirklnad has lots of problems from years of looking the other way.
[Reply]
Taxes are a necessity to have the services we all need and value. However, government should not be the only growth industry in the City. Reduce the rate of growth of salaries and benefits to map to the private sector.
There should be no punishment nor UNDO FINANCIAL REWARD for choosing to work for the City.
By the way, the Cities rejection of the BofA project cost them dearly in permit fees, mitigation fees and sales tax revenu on millions of dollars in construction.
[Reply]
I am not surprised at the positive response to cutting city employee wages benefits. It seems like a way to reduce expenses without cutting services. But do you want good city employees or not? Anyone who has ever run a business with employees for very long understands that good people will go elsewhere if they will be treated better there.
Are 11% benefits increases and 6% wage increases unusual? For benefits, I’ll bet the skyrocketing cost of health care insurance means that it takes a double-digit increase in that cost of the benefit just to maintain the same package. I’d want to remain competitive with surrounding cities.
[Reply]
I disagree with Ghost’s comment above. First off, Kirklnad has an excellent reputation for being a progressive and well paid place to work. I considered working for the city in the 1990s but later took another offer. Health care inflation has been high of late. But no matter how you slice it, the union control of the employee contracts for the city have undue influence on our budget. The city can’t make a move the unions don’t like - how else did we end up with 6% wage growth and 11% benefits? This does not exist in my real world.
I don’t get the annexation part. I don’t understand all the details, but if the city planned to lower benefits last year from 11% growth to 5%, why not do it now? How about just for a few years to get us all out of this mess? That better than losing headcount, right? How much money would that save? I bet the whole deficit could be fixed with that one hit because it is 70% of the budget. Keeping good employees is important. Good employees will stick through the bad times because Kirkland is good to them.
[Reply]
I am quite sure all the city employees would very much enjoy getting a 6% annual increase, as well as a 10% increase in benefits - I would too as I am married to one of them! However my husband has worked for the city for over 20 years, and I will tell you that his annual salary increase is in fact .5% to 1.5%, and many years it has been ZERO percent, the same for all other city employees as well barring the occasional promotion. I’d say this is in line with the private sector.
10% yearly increase in benefits is very questionable as well - not sure where this information is coming from… the rising costs in insurance every year might be attributed to a part of it but I can tell you again that there have been no additional benefits added every year, as this “10% increase” seems to suggest.
Rob may have been looking at a salary survey, which evaluated salaries for comparable positions in other cities. I believe Kirkland’s salaries are often LOWER than they are in other comparable cities. Perhaps these kinds of increases would put Kirkland employees on a par with other cities wages? It certainly isn’t happening any time soon though!!!!
[Reply]
It is your right as the owner of this blog to create a survey but let’s acknowledge that the wording and layout of your survey will lead to predictable results. The term “raid” on the fleet suggestion will reduce people that chose that answer. I agree that is not a good source to find money, but the wording could have been more neutral.
You are misunderstanding the numbers related to wages and benefits. The percentages you reference relate to the City’s COSTS not the wages and benefits received by the employees. Remember, these numbers reflect all employees and include overtime. When I worked for the City, the employees I supervised never came close to a 6% raise each year. The first year you are employed you receive a significant bump (at most 10%) but that reflects your increasing worth as you pass your training (for public safety) or pass probation. Most “office workers” only receive a cost of living raise each year that is tied to the CPI. Some of the contracts have limits on the min and max for the COLA that could be questioned, however, since there are NO other options available to supervisors to increase an employees pay after 3 years (for most employees) of employment the COLA is important to keep wages in line with the market. There is no option for the supervisor to give the employee any other raise for great work. The benefits and secure pension is what keeps people in public service - NOT the wages. If you start cutting the benefits (which rarely increase - it is the cost of providing the same benefits that increases) you are going to lose employees. That might be OK to you - but don’t complain when you get what you pay for… No one questions City wages when the economy is good and people could leave for a larger wage (which many people don’t because they know when the bad comes they stand a better chance weathering it with the City than in the private sector).
[Reply]