Blue Ribbon Budget Recommendation
While most of us were watching re-runs of LOST on Wednesday nights, 8 of Kent’s best and brightest financial minds were hard at work serving their city, sitting thru 9 months of financial analysis, staff reports and council discussion all in the name of securing a better future for Kent. I’m sure there were times that the reams of data left them feeling like they were watching an episode of LOST but at the end of their tenure they sat amongst themselves and hammered out an insightful financial strategy. Admittedly, it is a recommendation that may not be politically expedient but it is financially sound. The question we have to ask ourselves is which do we want mortgage our future with — political expediency or sound finances.
For anyone who hasn’t been following the financial storyline, let me recap:
Over the last 5 years the city’s revenues have failed to keep pace with expense growth and despite expense management efforts the gap between revenues and expenses has increased each year.
One thing is clear: the era of robust revenue growth is over, and health care, energy, and transportation costs are at all time highs. The city has been able to delay the impacts of its financial imbalance by deferring projects, reducing head count, freezing vacancies and making efficiency improvements to minimize the stress on core services. But without an infusion of new revenue, or a cut in services, the structural deficit will force the city to dip into its reserve fund balance for the third straight year in order to balance the books.
On a short term basis using reserve funds to bridge-over temporary problems is a reasonable strategy – after all that’s what reserve funds are for – but the problem is that the city can only go to the well so many times before we come up empty, and that day is now on the horizon – estimated at 2 ½ to 3 years from now. That may sound like it’s off in the distance but we need to be talking about it and planning for it now so that we can come up with a thoughtful, reasonable fix rather waiting until 2008 and having to act in desperation at the last minute when our options will be very limited.
Building a Solution
City Council took an unprecedented step to commit to a year-long, community-wide effort to develop a Financial Strategy to re-balance the budget and ensure the long term viability of city services. Council has assembled a panel of financial experts from the community to join them in a series of financial workshops.
The Workshop schedules were as follows:
Expense Topics –
January – Overtime, Professional Services, Contracts
February – Health, Labor Costs, Staffing Levels
March – City Service Levels, Reduction Scenarios
Revenue Topics –
April – Fees, Chages and Fines Revenues
May – Income, Property Tax Revenues
June – Economic Development and Growth Revenues
Startegy Sessions –
July thru October – create a multi-year mix of expense/revenue options to
ensure a sustainable budget
October thru December – solicit public input on options, citywide budget
survey mailed, town meetings, etc.
The Blue Ribbon Panel members have made their recommendation and now City Council wants to hear what the community thinks about it. The recommendation has the makings of being controversial because it includes a proposed tax increase.
But before you hit the “delete” button, it’s important to understand the context of the proposal and get inside the heads of your peers that made this recommendation. Remember this was not your City Council or City Manager making some self-serving recommendation or taking the “easy” way out — this was 8 citizens just like you that drew their own conclusions based on 9 months of studying the problem from the inside out. These same people will have to pay more too but they have come to believe that if we don’t do that Kent will find itself on a “death spiral” (their words not mine).
You should know that before making their recommendation a couple of the panelists were very clear in stating that before they started this study 10 months ago they were certain that they could devise a strategy to cut the “fat” out of our government services in order to balance the budget. But after studying the staffing levels, service costs and city tax rates they gradually began to realize that those cuts had already been made and any more cuts could be debilitating to the quality of life we’ve all come to expect by choosing to live in Kent.
The Blue Ribbon panel was just like you, full of perceptions about government spending, and skeptical of any suggestion to tax our way out of this problem. And in the end, I think they proved that by recommending a tax increase not as a solution in itself but as a means to reinvest in our Kent economy.
Their message was simple and logical — new businesses hold the key to our economic future so lets go after new businesses at full speed. Let’s stop pretending to be in the economic development game and let’s raise the cash we need through tax increases to compete for new business at a level that gives us a chance to succeed in building our economic base so taxes can actually go down in the future.
The strategy is reminiscent of private companies that sell shares of stock in a public offering to raise the capital they need now to make new investments that seek to yield greater economic gain down the road. What’s good for private business is good for city business too — you have to spend money to make money.
Although it is tempting to take their conclusion and label the panel members as “tax and spenders”, I can tell you that would be a mistake. These are people that make their living advising on how to make the most from your money and how to invest prudently. I doubt they have ever before advised their clients to pay more in taxes (and may never again) but they are trained to evaluate financial data and in this case that’s where the data led them.
As you read through their recommendation remember two things:
1)their recommended tax increases are proposed with a sunset clause, after 7
years they go away; and
2)even with their proposed increases, what you pay in state and local taxes
will be less than what you are paying right now.
And all the financial reports, analyses, summaries, etc. are available at this link: