City Manager: 2013 Budget 'Frustrating'
Kent City Council approves proposed operating budget for next year in committee
Another year and another deficit is forecast for the city of Kent's budget despite rising income tax revenue.
Kent City Council voted to approve the city's 2013 proposed operating budget in committee this month, and like recent years it forecasts a more than $1 million budget deficit by year's end.
Kent City Manager Dave Ruller called the $46.7 million budget "frustrating" for its restraint on city services, but he said the budget also honors commitments to provide services to residents.
Ruller said the city's annual budget theme has changed little since he came to Kent seven years ago, and it's been a theme of continual cost cuts.
"This budget … really is the toughest budget yet," he said. "There’s more cuts. There’s more denials of requests. There’s more deferrals. There’s pretty much more of less than ever before."
Deficits less than projected
For 2013 the city projects a total deficit of $4.38 million, meaning that's how much more the city plans to spend above the expected revenues it will collect next year.
Kent Budget and Finance Director Dave Coffee said that total figure includes self-sustaining operations, such as the Kent Parks and Recreation Department, which is paid for by user fees and a parks levy, and water, sewer and other utility services, which are paid for by user fees.
The actual, projected government operating gap for 2013 is $2.25 million, Coffee said.
"Our actual, annual gap is in fact coming down now from it’s high," he said.
To start 2012, city officials projected a budget gap of $2.8 million. But city officials have chipped away at that through cuts and other cost-savings, and by year's end the actual 2012 deficit is expected to be about $1.4 million.
And while Coffee is projecting a $2.25 million deficit for 2013 he's hopeful it will be closer to $1.15 million by the end of next year.
Rising tax revenue
After a few years of staying relatively flat, Kent’s income taxes are steadily rising in 2012.
City income taxes were up 5.5 percent, or about $261,000, more in May 2012 than they were in May 2011.
As of June, the city collected about $5.9 million in income taxes so far this year. The city originally projected $10.9 million in revenue for the entire year, and because of growth so far this year city officials are now projecting $11.4 million in total revenue for 2013.
"One year ago steel beams were just starting to come out of the ground across the street," Ruller said. "And now it’s arguably an emerging, vibrant little downtown we’ve got coming out of the ground with all the new stuff meeting with the old stuff. And that’s great news. There’s a validation that our plan for financial recovery is working."
But the city still faces fiscal challenges, and those include losses of more than $600,000 in state local government money and an annualized $200,000 loss with the elimination of estate taxes starting next year.
"It certainly doubled us up on the whole we were digging ourselves out of," Ruller said. "The financial plan is working, but the hole got deeper. There’s great things happening … we’re optimistic, but we’re still dealing with some trouble."
Depleting reserve cash
In recent years, like expected in 2013, the city has had to dip into its reserve cash, or undesignated fund, to make up that deficit.
Since 2008, the city has been using reserve funds to help cover budget deficits. As a result, the reserve cash dwindled from $12.7 million at the end 2008 to what Coffee projects will be about $7.3 million at the end of 2012 going into 2013.
Coffee said he plans to propose a management policy for the city's reserve cash to council in the near future.
"We did in fact go literally line by line through each budget with our department managers … to which at many cases we challenged them at the $100 level," he said of the 2013 budget. “We had a lot of concessions made by departments … but there were offsetting increases which were required. It almost looks as though we tweaked it very little."
Council members will cast the final vote on the 2013 budget later this month.