November 25, 2010 in Washington Voices

Budget less stress for Spokane Valley

Age of city, conservative fiscal stance credited
By The Spokesman-Review
 
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By the numbers

• Spokane Valley

$36.9 million 2011 general fund budget

$24.6 million beginning fund balance

• Spokane County

$136.8 million proposed 2011 general fund budget

$13.9 million beginning fund balance

• Spokane

$156.6 million proposed 2011 general fund budget

$11 million beginning fund balance

While governments all around the city of Spokane Valley have been cutting and hacking at budgets with the equivalent of axes and chain saws, Spokane Valley has made what amounts to a few light snips with a pair of scissors and is sitting on a fairly comfortable cushion.

The city of Liberty Lake has instituted a utility tax and is talking about cutting library hours and closing the city golf course during the winter. The city of Spokane is looking at $13.6 million in cuts, including possibly laying off firefighters and police officers as well as shutting down a library branch. Spokane County is also facing a shortfall and may need to cut up to $1 million from the Sheriff’s Office alone.

In contrast, the Spokane Valley City Council decided to eliminate 9.5 positions that were funded but had never been filled. “They’re definitely positions that we would have filled in a normal economy,” said City Manager Mike Jackson.

Each department was asked to trim expenses by 3 percent. The council also voted to deny non-union employees a cost-of-living pay increase scheduled for 2011, saving about $40,000. But the council made those changes because they wanted to be conservative, not because there wasn’t enough money in the bank to pay the bills. “That’s the distinction,” Jackson said.

The city has had to deal with less money coming in the door. “We’re not different in terms of the challenges we face,” said Jackson. “Right now we’re seeing declining revenue and increasing costs.”

On the other side of the coin, the Spokane Valley council also voted to lower 2011 property taxes by 1 percent, eliminating $100,000 in revenue. The council also added expenses in 2010, such as broadcasting the city council meetings on cable and hiring a police precinct commander.

This was made possible by a healthy bank account; $24.6 million will be left in the bank at the end of 2010. The city’s 2011 general fund budget is $36.9 million, only slightly more than the expected $36.4 million in expected revenues. The city also has a $5.4 million service stabilization fund for emergencies.

“The city has been conservative since its inception in 2003,” Jackson said. “From the beginning the city created reserve funds.”

In comparison, Spokane County expects to have a beginning fund balance of $13.9 million as December rolls over to January. Its projected 2011 general fund budget is $136.8 million. The city of Spokane is putting up similar numbers, expecting to have $11 million in the bank at the end of the year (plus an additional $16.6 million in emergency reserves) with a proposed 2011 general fund budget of $156.5 million.

Governments must have money in the bank at the end of each year to cover payroll and operating expenses for several months until property tax revenue arrives in the spring. For the city of Spokane Valley, those costs are only $3 million.

“I think we’re lucky,” said Gary Schimmels, who has served on the City Council since the city formed. “The attitude toward spending money, that hasn’t been an obsession. We don’t like to get into trouble and hunt for money to spend. I just think we’re very fortunate out here.”

Schimmels said former City Manager Dave Mercier deserves some of the credit for the city’s cautious line. It was Mercier who suggested the city have a minimum of 15 percent of the general fund in reserves, an amount the city is well over. “We’re fortunate to have the circumstances that we have,” he said. “We’re fairly stable. We happened to be doing the right thing at the right time.”

Schimmels, Jackson and Mayor Tom Towey also point to the city’s status as a contract city as a major bonus. The city does not have its own library system or fire department. Policing is provided by a contract with the Spokane County Sheriff’s Office. Numerous other contracts cover park maintenance, street maintenance and other services.

“That takes a lot of direct employees out of the system,” Schimmels said. “If we had the law enforcement here we’d have the unions. Basically the county takes care of that whole thing. That’s a big item. It’s very obvious, I think, on the bottom line.”

When the city formed, the first council made the decision between contracting out work and doing it in-house, Towey said. “I think that’s what saved us in the beginning,” he said. “We have 18 contracts with the county right now. Those contracts saved us a ton of money in the beginning. I think if they had tried to do a mixture of both, they would have been in trouble right now.”

Because of the heavy amount of contracting, Spokane Valley (population 90,210) has a low number of employees when compared with other cities its size. It has 88 full-time employees and 19 part-time employees. The city of Kent has almost the same population and has 768 full-time employees. The slightly smaller city of Renton has 669 full-time employees. The closest is the city of Sammamish (population 41,070), which has 74 full-time employees.

“The other (reason) is simply that we are new,” Jackson said. “We have very little debt service. We’ve had a pay-as-you-go philosophy.”

Despite the fact that Spokane Valley seems to be sitting pretty, Jackson cautions against spending the money. “The city should keep that money in reserves for essential services – law enforcement, courts, streets,” he said. “I think it’s too soon to think about spending the reserves.”

Jackson said he would prefer to wait a few years until the economy recovers. “You could create a list that would more than spend our reserves,” he said. “It could vanish in a hurry.”

Towey agrees with Jackson. Right now the long-term budget forecast shows the city spending $14 million in reserves by 2013 to pay the ever-increasing costs of the services it offers now, Towey said. “Certainly we will adjust as we go along,” he said. “A forecast is always a forecast. We’re going to have to really watch what we do between now and then.”


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