The Spokane Valley City Council spent the entire day Tuesday discussing the city’s 2012 budget with city staff. The council’s finance committee, which includes Mayor Tom Towey, directed the department heads to prepare budgets that include no more than a 1 percent increase over the 2011 budget while also planning for a 2.5 percent salary increase for all employees and for inflationary increases in the many contracts the city has.
“The 1 percent increase in expenditures is overall,” said Towey in an interview Monday. “One percent is what we think would be ideal.”
Towey acknowledged that departments would have to make cuts in some areas in order to meet that 1 percent goal while also covering salary and contract increases. “It used to be 7 percent,” Towey said of the annual budget increase. “Then we cut 3 percent. This year we want to hold it to 1 percent. I don’t know if we can. Maybe we can’t. Maybe it’s too small.”
The city is trying to walk a fine line between shrinking the budget and not hurting the service the city provides, he said. “As far as I can see it’s going to be a tight budget,” he said.
During Tuesday’s budget retreat, finance director Ken Thompson presented a five-year financial forecast that calls for the city to have a $27.5 million carryover in the general fund at the end of 2011. Through 2015 that number would drop slowly to $24.1 million. The forecast presumes that expenditures would be limited to increases of between 1.5 percent and 2 percent per year, Thompson said. “That’s going to be tough to do,” he said.
Each department indicated what cuts they would need to make to meet the 1 percent increase limit for 2012. The Community Development Department would have to reduce overtime in several areas, which would mean inspectors could not meet with contractors outside normal business hours. Perhaps the hardest hit would be the Parks and Recreation Department. Director Mike Stone said it will cost an estimated $100,000 to maintain the new Greenacres Park next year, which will shatter the department’s 1 percent cap.
To meet that cap Stone said he would have to cut a park sign program, a dog park master plan, one week of swimming at all three city pools, the two free summer movies in Mirabeau Park and not replace 500 chairs at CenterPlace.
The free movies are very well attended, Stone said. “It’s one of our few free programs,” he said. “We’d love to do some more.”
The pools do not pay for themselves, Stone said. Admission is $1 and the city would have to charge $7 or $8 to cover actual costs. “Obviously that’s just not going to fly,” he said. Closing all the pools for a week would save $45,000.
Council members did not seem supportive of closing the pools. “I don’t think you need to be penalized because you put in a new park,” said Councilman Chuck Hafner.
The city’s public safety contracts are a large part of the general fund spending. The city contracts for police officers, jail services and court services. Senior administrative analyst Morgan Koudelka said the only way to meet the 1 percent cap for 2012 is to eliminate a $970,000 contingency fund. The city pays for its public safety contracts based on estimates. After the year is over the actual number of police calls and court cases are examined and the city’s bill is adjusted to pay for the actual usage, which sometimes requires dipping into the contingency fund. “We don’t have that to fall back on,” he said.
The 1 percent cap is not something that could be applied to public safety in future years, Koudelka said. Law enforcement service costs go up an average of 3.5 percent a year and that difference will quickly snowball. “It’s not sustainable,” he said.
“It will get tougher and tougher as the years go on,” said City Manager Mike Jackson.
The Public Works Department has asked for two temporary seasonal employees in the winter to help with snow plowing. “I need to have one city guy running with the contractors,” said Public Works Director Neil Kersten. “When we start running multiple shifts I don’t have enough guys. When you start driving 14, 16, 18 hours, it just isn’t safe.”
The city’s street fund had a carryover at the end of 2010 and the finance committee has suggested spending an additional $500,000 on street maintenance, $450,000 for bridge/street maintenance and $500,000 on pavement preservation. Kersten said he would like to use some of the money to replace the city’s snowplows, which were used when the city bought them. If the level of funding suggested for 2012 is maintained, the carryover balance will soon be gone, Kersten said. “I wouldn’t burn that fund balance too quickly,” he said.
The council also spent time discussing goals for the future. Councilman Arne Woodard suggested reviewing all city regulations and the city’s municipal code. “We should start probably with the signage and landscaping regulations,” he said.
Councilman Bill Gothmann said the city’s current sign rules came from an ad hoc sign committee that included two business owners, two sign company representatives and one citizen. “It took years,” he said. “That’s originally where it came from. The inputs were primarily from businessmen.”
“I think that those regulations were put in place in a different economy and a different time,” said Grafos. “I think that has to be the No. 1 priority for this council in 2012.”
Woodard also suggested that the city be looking for land it can purchase for future parks. “We’re running out of large tracts of lands in certain areas of the city,” he said. “We’ve got a great park system and I don’t want to see us miss out.”
Several capital projects that had previously been advocated by some council members were also discussed to see which, if any, should be addressed soon. The projects include a west city gateway at Thierman Road for $120,000, improvements to the Mission Avenue trailhead for $150,000, landscaping at University Road and Appleway for $100,000, creating a railroad quiet zone at Park Road and Vista Road for $907,000 and doing landscaping along Appleway for $640,000.
The city has $1.8 million available to spend and most of that has been set aside as street preservation money, said Thompson. “There’s no requirement to spend that money,” he said.
Jackson said the council might prefer to wait until after some economic development discussions have taken place before making a decision. He reminded them that the money was set aside for roads and cannot be replaced. “It is not sustainable,” he said. “In other words, we’re tapping into the street fund. It took a while to build that money up. I think we need to be very careful how we spend that money.”
Towey suggested the council members pick which projects they believe should be the top priorities. “That doesn’t mean we’re going to start that project tomorrow,” he said.
The project that got the most votes was putting in drainage swales along Sprague Avenue between Thierman and Park roads. The $630,000 cost would come out of the stormwater fund. Other projects that got a few votes were the west gateway project and landscaping along Appleway.
Community Development Director Kathy McClung presented the council with a outline on how to move forward with an economic development plan. It would cost an estimated $75,000 to $80,000. “It would be good to get some of the work done by the end of this year,” she said.
Woodard said he thought the process would take too long. “There’s gotta be a way to get an economic plan going,” he said. “By the time we start spending money it will be 2014. I don’t think we have that much time.”
He suggested doing some sort of emergency ordinance to suspend or reduce some regulations. “We’ve got to think outside of the box,” he said. “We’ve got to do something bold and drastic.”
Gothmann said the city’s economic development plan would have to include all taxpayers, not just business owners. “We need to go outside City Council before City Council decides anything,” he said.
The first step should be to define the problem, Gothmann said. “I’ve heard many, many definitions of the problem and they’re not really problems, they’re solutions,” he said.
“I think you can drive up and down the street, Bill, and see what the problem is,” Grafos said. “It’s the economy.”
Councilwoman Brenda Grassel suggested holding a brainstorming session to generate short-term ideas to boost business. “I need to hear from business first,” Gothmann said. “Let’s define the problem well before we assume we know what’s best for those business owners.”
The problem is bigger than just Sprague Avenue, Grafos said. “We’re talking about the sustainability of the city,” he said.
“Then let’s ask them,” Gothmann said. “Well, that’s what we’re here for,” Grafos said.
McClung pointed out that her staff has recently processed applications for 76,000 square feet of office space, 80,245 square feet of retail space and 110,000 square feet of warehouse space. “We’re aware of quite a few major projects coming our way,” she said. “It’s not all bad.”