Kirkland’s 2009-2010 Budget Gap: $13.8 million in the hole
The City of Kirkland is facing a $13.8 million deficit for its 2009-2010 budget. In the language of financial analysts, this is known as a doozie. The City is conducting a massive communications effort to inform the people of Kirkland of the looming budget shortfall. Whatever communications strategies are ultimately deployed, the underlying reality is this:
The City of Kirkland is spending money faster than it brings it in through taxes. As a result, the City Council plans to both cut service levels and raise taxes to balance the budget.
By law, Kirkland must balance its budget. Therefore Kirkland will never have a “deficit”. Some in City Hall bristle when they hear the word “deficit”, so it is a term best not used. The preferred term to use is “gap”, often found in sentences like, “Someday we must address the structural gap in Kirkland’s finances.”
The July 15 Study Session was originally scheduled to address “The Design Review Board Role” but at the last minute the agenda was changed to address “The Update on Budget Communications Plan”. This plan provides the City Council with the status of the 2009-2010 budget process and the associated communications plan. A few highlights of what we can expect to come our way: Projected Budget Gap Messages:
Kirkland faces a serious budget shortfall.
- • Based upon financial forecasts, Kirkland is facing a $13.8 million projected gap between its expenses and revenues in 2009-2010.
Kirkland’s revenues have struggled to keep pace with expenses.
- • Revenue has been negatively impacted by voter approved tax limiting initiatives and current economic conditions
- • Expenses have been negatively impacted by increasing employee wage and health care costs
Kirkland can no longer continue to provide the current level of services with existing revenue.
- • The City must adopt a balanced budget
To balance the budget, Kirkland will need to reduce services and raise revenue.
A summary of the 2009-2010 Budget Strategy can be found in Attachment A below. Note: budget numbers are still labeled “draft”.
At the core of Kirkland’s budget problem is the fact that the City’s expenses are rising at a faster rate than revenues. The City’s wage expenses rise at 6% per year and benefit expenses rise at 10% per year (as quoted from 2007 estimates). City projections show that these rates are unsustainable.
On the revenue side of the equation, the City raises property taxes at the maximum allowable 1% per year without a vote of the people. Sales tax receipts, utility taxes and business taxes make up the bulk of the rest of City revenues.
During the annexation study, the City examined these numbers in great detail and determined that the current “gap” is unsustainable and changes must be made. It will be interesting to see how the City Council deals with this budget mess we are in. Will they solve this structural budget gap or will they choose a short-term solution? Will taxes go up and services go down? How much will be cut from the City budget? Will changes be made to the core issues contributing to the budget “gap”? Will we have learned anything from this budget mess or will we return to business as usual?
There is a great deal of public relations and marketing going into this budget communications plan. For the sake of the City, let us hope the City Council chooses to trim the budget wisely and deal with the structural imbalance known as “the gap.” We need real change in how things are run in our city. As we hear over and over these days, “business as usual is not going to get us there.”
What are your views? The City Council has yet to adopt their current strategy of lower service levels and higher taxes. They would appreciate any comments you have on the subject.
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21 Responses to “Kirkland’s 2009-2010 Budget Gap: $13.8 million in the hole”
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By N2H
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I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.
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Rob, are you aware if other cities in the area are facing the same projected deficits, oops, I mean gaps? Are we unique or is this regionwide?
And I agree with Jason about the blog, very well done!
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Trooper,
I do not know what condition other cities are in with regard to their budgets. From conversations with Councilmembers, I understand that our predicament is not uncommon as Kirkland’s ability to generate tax revenue is limited by law and through citizen initiatives. Like other municipalities, Kirkland must ask the voters for permission to raise taxes above certain thresholds.
That said, perhaps another reader has insights on this issue. I do recall reading in the Reporter that some in unincorporated King County have named Bothell as a city with a strong financial situation.
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If that’s true about Bothell, then Kirkland should let the PAA go (they should have done that already, IMO) so that the possibilities of annexing to can be vetted.
The budget situation in Kirkland is not going to make it any easier for annexation to be considered here and the Council should have realized that long before now.
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What the council does with the budget will seal their individual fates in the eyes of the voters. Think about this deficit in context of our recent boom economy.
Since 2003 property values have doubled. That means twice as much money Kirkland received from property taxes.
During the same period sale tax should have increased far beyond expected levels further padding the city coffers.
What did the city do with that winfall profit? I don’t know but I’ll bet they spent every last dime of it expanding pet programs.
Now they have a 12 per-cent deficit! How could that possibly happen to any institution planning budgets? It is an outrage that one or two weak quarters can throw the budget upsidedown and require tax increases. Who is responsible for budgets on the council because I for one suggest they are incompetent or asleep at the wheel.
What we should be seeing is cuts in personnel first and instead we are shown how they will try to candy coat this mismangement.
Ten years ago this sort of thing would go unnoticed by most people but I bet it won’t be so today. I voted for most of the sitting council. I feel they are lost or being lead by others and they are not looking after us any more. Cut your city budget and keep what I pay in taxes but spend it wisely. Don’t come assking for more because you have squandered what we already gave you.
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the issue seems likely as a regional problem for lack of taxing power and a city problem of poor budgeting resources. don’t look to Bellevue as a model because it is so big that it doesn’t even relate to Kirkland’s problems. Bothel and Redmond are good comps as to how they budget spend and tax. I agree with trooper about annexation. Kirkland can’t afford it and those in power are hungry to expand our boarders. That idea should have died long ago. Look for it to rise again because these guys won’t listen to us.
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A bit of poking around on some other local cities websites has show that Bellevue is anticipating some shortfall (as mentioned in their 2007-2008 budget long term projections) http://www.ci.bellevue.wa.us/budgets.htm
Seattle is projecting some shortfalls: http://www.seattle.gov/financedepartment/pdfs/4-21-09_2009-2010_Revenue_Forecast_Council.pdf
Redmond does not have any projections up that I can see, but is implementing a new method of budgeting (budgeting by priorities) that could have some merit and Kirkland might want to consider reviewing:
http://www.ci.redmond.wa.us/bp/default.asp
And of course everyone knows that the State of Washington is now looking at a budget shortfall as well. Some of this is due to a reverse in the economy and some may well be due to poor financial management. It is up to us as voters to review the expenditures and see if we think they managed resources well and are just getting caught in a fiscal downturn or if they really did squander resources and should not be allowed to continue to manage the city.
On a related note, I agree it is time to admit the fiscal reality that annexation (no matter if you agree with it in theory or not) is not going to work out and as such Kirkland should open up the opportunity to other areas.
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DCD,
Fantastic research. Thanks for enriching the conversation.
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Indeed our City is in a financial crisis. It has been pointed out Kirkland is not alone. Nothing new to those of us who have followed the actions of this Council and most notably those Council members who have served more than 4 years. There does not seem to be a program or project that these folks didn’t find the money for. New boards and commissions and lots of “feel good” stuff got funded. Lots of “one time” positions that according to the last budget meeting amounted to several million dollars are now in jeopardy. What is really surprising though is how “asleep at the wheel” most Citizens are. H.P.W. states “cuts in personel first”. So where and what do you cut? One person’s fat is anothers meat. Fact is that sales tax revenues everywhere are down. People aren’t spending due to uncertainty. In our City it doesn’t help that a majority of the Council (backed by a tiny minority of well healed and vocal opponents) stalled or derailed several redevelopment projects. One thing is clear to me that we cannot sustain our City without development and redevelopment. As much as I may not like change we will be alot worse off without the associated one time sales tax from construction and new property taxes development brings. I don’t want to have to go to Bellevue or Redmond to spend what money I have to spend. To believe that the 1% per year cap on property tax increases can keep up with the cost of living is ridiculous. Additionally (and I am not defending the Council) even H.P.W. didn’t have a crystal ball that predicted the mortgage crisis or skyrocketing energy prices. On the spending side I think the City provides us with a lot of good things for our tax dollars. I attended many of the annexation meetings and I will tell you that I wouldn’t want to be in unincorporated King County! At least when we call 911 we get a cop to our door shortly therafter. I also don’t think the Council can “candy coat” anything. Fact is that we as property owners, residents and businesses have to help the Council make some tough financial decisions based on expected revenues. We need to tell Council what our priorities are after Public Safety which according to the City information accounts for around 60% of the budget. The remainder must be carefully spent on highest priorities first and feel good or non-essential things last. We must also continue to fund reserves for times like these. I applaud the City for trying to get the information out and will watch and participate in the process. Finally, the big question is whether whatever we do now will assure our long term survival as a viable City in 5, 10 or 20 years? Suppose that Bothell or some other City annexes the PAA? Have we sealed our fate as a City that at some point becomes someone elses PAA? I heard this question posed during a neighborhood picnic last week. Something to ponder!
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There are nice comments from all the above bloggers! kbb - I like your approach to this subject when you said all of us need to say what our budget priorities are for Kirkland.
a. Fire and Police service should not be cut at all because that is really the most important job of government.
b. Park maintenance - plantings and lawn care
c. Road maintenance and sidewalk repairs
What should be cut is a harder proposition. Have you seen the phone book the parks department calls a program directory? THAT CAN BE CUT IN HALF AND NO ONE WILL EVER NOTICE. Is Kirkland a health and fitness spa and I somehow am paying for the privilege I never knew was mine. Problem is I don’t think my taxes should be going to that, thanks for asking.
I know there is a good 15% to 25% of non-essential FTE floating along collecting a paycheck and benefits that know they are not contributing their best to our city. That is the case in any institution. A certain percentage is low performance and occasionally needs to be removed. The problem with large institutions like government, the boeing and I would think even microsoft is that it is difficult to ever clean out the low performers. My company is doing just that right now and it is a subtle push from h.r. to make it easier for people to consider a job at another company. Any institution suffers when to much of it is less than productive.
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A few months ago a downtown business owner asked why the dozens of people sitting in our jail doing time couldn’t be placed in non-descript coveralls with an ankle bracelet and put behind mowers, planting flowers or even cleaning up after softball games. Good question. It would save hundreds of thousands and the prisoners would doubtless appreciate it vs sitting on their duff.
The city spent a million planting gardens down the center of Central Way and now spend thousands replacing plants that die from the resulting carbon monoxide spewed from the ensuing traffic jam (who’d have thunk?).
The city spent $2.8 million rearranging Heritage Park and STILL can’t fix the horrible sidewalks downtown.
2 quick questions;
1) Have you even walked in Heritage Park in the last year?
2) Have you (attempted to ) walk on Park Lane in the last year?
To paraphrase an old axiom… ‘The definition of Insanity is keeping the old council and expecting a different result’.
Bye bye Tom, bye bye Jim, bye bye Jessica, watch yer butt Dave.
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FDM and John are on point about priorities. The items mentioned are a good start and worth looking at. What is maddening is that when I watch the Council meetings (I work those nights but watch the streaming) it never seems that anyone challenges the Council. Bob Style “the citizen moderator” is entertaining but his analysis and numbers never add up. His attacks are more personal than factual. Nonetheless he is a voice of dissent and more are needed. I think it was Coucil member Sternoff that first said that the City couldn’t continue to do business as usual. He is right and my observation is that it will take a huge public outcry to change the way that this City does its business. As I am in the tech industry I watch the tech investments this City makes. Most are good and greatly needed but I wonder where the tradeoff in efficiency and lower labor costs are? I heard a Council member ask that question and I don’t think the Staff gave a definitive answer. I really shouldn’t be surprised when there wasn’t an answer given. I don’t remember any of the Staff seen or heard on TV that night offering personel reductions in their Departments!
I hope that the Council reads this blog although I think I heard the Mayor comment that one shouldn’t get their news from the National Enquirer! Of course our local rags the Reporter and the Times don’t seem to want to dig too deep into the morass of this City.
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John Gilday asks if anyone walks in Heritage Park and if anyone has tried to walk on Park Lane. I do both on almost a daily basis. I love walking in Heritage Park and almost always see other people there walking their dogs, playing Frisbee or football on the grass or playing on the tennis courts. In addition Heritage Hall is being used for events. For example the Moss Bay Neighborhood Association used it Monday evening for their first BBQ which was attended by over 85 people including most of the City Council. So while it may not be as popular as Marina Park or Peter Kirk Park it is used.
As to Park Lane I will agree it seriously needs work. The City has recently formed a task force to explore how to best renovate the street. Always assuming there is money to do so. But they are studying the problem.
It appears from the comments I am reading here that people would like to see the city refocus what it is spending money on. I do think Redmond has the right idea with the new Budget by Priorities method they are using this year. I encourage people to read the overview here http://www.ci.redmond.wa.us/bp/pdfs/BPOverview.pdf and see if they think it is something that could work here and if so think about how we could persuade the Council to implement this process. Obviously it is probably too late to do the whole program this year, but maybe components of it could be used to start. I do think a serious review of what Kirkland is spending its money on is needed – which apparently now includes up to $12,000 in outside legal fees for the Council incident on July 1st: http://www.pnwlocalnews.com/east_king/kir/news/25731304.html is needed.
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DCD is right about Heritage Park. Park Lane will be another study that costs staff time and money. Like many other studies and projects like Lakeshore Plaza few on the Council will endorse and fewer will vote to fund. It is hard to believe that this is the same City whose previous Council members bought the vast waterfront we enjoy today.
Maybe it’s just me but it seems that these budget meetings revolve around things the City Staff wants. After watching the tape again I hear the Mayor and a couple others talk about saving a penny here and dollar there. The Mayor even offered up (I don’t think he told the rest of the Council beforehand) 10% of his and the Council’s pay. Someone told me that it would amount to about 11k over 2 years. Later at another Council meeting the Mayor wants to establish a Sustainability Board. Wonder what that will cost? Maybe that is where the pennies saved will go!
Redmond is a strong Mayor city. The Mayor has much more power because he is voted in by the residents to run the City. Priority based budgets are great and if you notice the first line of input is from CITIZENS then Staff!
Kirkland however has a weak Mayor (no pun intended!) form of government where the Mayor is elected from the Council. The City Manager serves at the whim of a minimum of four votes of the Council. He is in effect elected and therefore political. This never ending B of A fiasco and all the theatrics that surround it have cost the City money they don’t have. Thanks DCD for providing the link to yet another cost of this debacle. Let’s see, where else could the City have spent the 12k and all the staff resources they burned up? How about starting with the Park Lane sidewalks!
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I am not exactly clear on how Parks funding works, but let me put some things out there which should help explain things, and perhaps someone else can verify, amplify, or (I hope not) disprove them.
There is income from a Parks bond that was put in several years ago. Kirkland citizens voted to pay extra property tax levy to fund this. Money from this funded the Heritage Park development that’s mentioned here. I am not sure if any operations and maintenance funding comes from this.
The downtown sidewalks are in sad shape, but little has been done. There was a Sidewalk Bond Exploratory Committee a few years ago, but it was focused on residential areas. It may still exist, though this City of Kirkland web page shows they last met in 2005: http://www.ci.kirkland.wa.us/depart/Public_Works/Committees___Commissions/Sidewalk_Bond_Exploratory_Committee.htm
Maybe the city will put put a bond issue before us on a ballot to fix the downtown sidewalks.
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Ghost,
You are correct there was a park bond. It had many components all outlined at http://www.ci.kirkland.wa.us/__shared/assets/Parks_Bond_Highlights7635.pdf
I believe that the this bond is about to expire. The maintenance portion continues. I have heard rumblings of another Park Bond being proposed. In this case this was voted on by the public and the bond money appears to have been well spent.
As for sidewalks in Downtown I think everyone can agree that they are not in good shape. This is a good opportunity for people to weigh in on whether or not this should be one of the priorities?
Perhaps we could start an online list for consideration by the Council.
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As my name implies I am relatively new to this town. Various times in my career I lived in the area and really enjoyed it. I have worked for the big M for going on 18 years and have had the opportunity to live and work in various places around this country and the world. I have been commuting our here for the last few years while my family was in the midwest and after finally selling our home there have bought and settled here. Wherever I have been I try to stay tuned in to the vibe of the community. I think this blog is helpful in doing that and also in stimulating some thoughts. After having read all the different categories on this site and being bored last night skimming the City website I have concluded that this place is in deep need of some group therapy. My view is an outsider who was dropped in to this planet and so I may have some things wrong. If so accept my apologies up front and I will take my beating later.
It appears to me that your politicians sans a couple of them as well as some special interest groups and individuals are living in the last century. Nothing unexpected as it happens everywhere I have been. It is obvious that none of these people have read any history and certainly recent history of what is happening in other parts of this state or this country. If they did they would know that staying static is not an option. Our society is fast paced and you grow or you perish. I know this is Seattle and you are the home to all these great smart people who started and run great companies so you may think that this area is immune to what happens elsewhere. You are sadly mistaken and will pay the price for having not taken advantage of things like annexation and redevelopment now. Having read about the annexation while looking for a home in the greater Kirkland area I can’t understand the opposition to annexation. We did eventually buy within the City limits but understood had we bought in the annex possible area that we would assume debt and get less services than current Kirkland residents get for several years. That would have been ok with us. The City as I understand it would have gotten State money to help too. I understand the budget crisis but can tell you from experience that these things I have read the rants on the City budget and while there may be some nomimal savings in the shortrun, I would be concerned with the longer run as to whether these savings can be enough to avoid the inevitable. Having come from the midwest and before that New England I can tell you that you are on a very slippery slope. Without economies of scale that only come from consolidation or from adding new folks to the tax rolls you are setting yourself up for the inevitable failure. I personally love your taxation here as I don’t have to pay state income tax anymore. Add to that the 1% annual property tax increase and I am in the promised land. On the other hand though I know that the amount of money collected at the City level to even maintain basic services has to come from somewhere else. With inflation and general cost of living increases more money has to be raised. Where will it come from? Having read some of the City’s own propaganda about maintaining a small town feel and having a diverse community, I can tell you from experience that when the coffers run dry this will continue to be a small town but look much more like a Medina or Hunts Point in terms of residents than the place we just moved to. I wonder if anyone has done a calculation of what the newest B of A proposal with only a partial 5th floor will cost the residents of this City over time? My hope is that the folks that run this place get their act together very soon because if they don’t that light at the end of the tunnel will not be sunlight! My 2 cents worth on a less than sunny day here.
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[...] recent Kirkland Views article, Kirkland’s 2009-2010 Budget Gap: $13.8 million in the hole has caused some concern, confusion and even consternation on the part of a few of my friends [...]
We need to make a list as someone else has said. The list needs to have our priorities listed clearly so that when Councils vote the have our list in their hands and not just the priorities of the city manager.
I’ll start with police, fire, sidewalks, park lawn care and a PARKING GARAGE DOWNTOWN.
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For the latest on the budget (no real new information, just a new publication) you can check out this City Newsletter that will be arriving in your mailboxes soon.
http://www.ci.kirkland.wa.us/__shared/assets/City_Update_Special_Edition_Summer_089556.pdf
One suggestion I have to save money is to have an opt-out for print mailings. I found out about this newsletter from an e-mail from the City telling me the hard copy would be mailed shortly. I hate print and I would love to save them the mailing, printing costs and trees and tell them I would prefer all my communications electronically. If enough people did that it could make a slight difference.
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[...] need to be addressed before it can even consider almost doubling in size through annexation. The current budget strategy proffered by the City will lower service levels and raise taxes in Kirkland — in part, an [...]