Spokane Valley budget proposal dips into reserves
After years of carefully guarding Spokane Valley’s generous ending fund balance, City Manager Mike Jackson told the City Council on Tuesday that he’s ready to use some of that money for projects.
The ending fund balance, which is the money left over at the end of each year, is $25.6 million, or 74 percent of the annual general fund budget. Jackson proposed dropping the balance to $17.9 million, which is 51 percent of the general fund, and setting aside $2 million for the replacement of the Sullivan Bridge, $2 million for a future City Hall, $2 million for park development and $1.8 million for a capital reserve.
Many cities are content with a 15 percent ending fund balance, Jackson said. Cities must have some cash flow available so they can pay the bills while they wait for twice yearly property tax payments. City Finance Director Mark Calhoun has said he believes the city must maintain a minimum of 36 percent of the general fund budget in reserve.
Jackson acknowledged that he has changed his position on the subject. “This is a shift in that kind of thinking,” he said. “It’s still extremely sound. It’s sustainable.”
However, some council members questioned Jackson’s recommendation.
“This is a lot of new information,” said Councilwoman Brenda Grassel. “This is a new direction.” Grassel said she didn’t recall asking Jackson to make the changes to the ending fund balance.
Jackson said he made the changes after listening to council discussions over the last few months. There were comments made about the need to set aside money for the Sullivan Bridge and city staff have been instructed to investigate a new City Hall, Jackson said.
“I think we actually pointed staff in that direction,” Mayor Tom Towey said. “We did talk about a lot of things after the retreat.”
The council had earlier talked about using 6 percent of the general fund for street preservation projects. Jackson’s proposed budget sets aside that amount of money for roads, but only 2.5 percent comes from the general fund. The rest of the money would come from other funds the city manages, including one that has money set aside for the future replacement of CenterPlace and the police precinct.
“That’s a little bit different than what we talked about, going into all those funds,” Councilman Arne Woodard said.
Jackson said pulling the entire amount from the general fund would mean cutting 6 percent from all department budgets, including law enforcement. If the city didn’t cut the law enforcement budget by $1.2 million, that amount would have to be made up by all the other departments and would require steep cuts in city services, Jackson said. “I think we have an alternative that doesn’t require us to do that,” he said. “Why do that now with an ending fund balance of $26 million?”
Councilman Ben Wick praised Jackson for his creativity in funding street preservation. “Six percent was a very ambitious number thrown out at the retreat,” he said.
Jackson said the city has been trimming costs for the past few years and has eliminated 10.5 full-time employee positions since 2010. The 2013 budget is only 1 percent higher than the 2012 budget. “We’re really at the point of impacting service,” Jackson said. “In a way we’re trying to defy inflation. There’s not a cushion left.”
There was additional discussion on whether the city should take its allowed 1 percent property tax increase, which would be about $108,000. Jackson is proposing the city collect it, but some on the council have said they are adamantly against it. If the city were to decline its 1 percent increase every year for 10 years, it would lose $6 million, Jackson said.
“My preference is to increase the tax base,” Grassel said.
In other business, the council agreed with little discussion to bring back a proposed interlocal agreement with the Spokane County Library District for a vote. The proposed agreement deals with the purchase of 8 acres owned by businessman Jack Pring at the corner of Herald Road and Sprague Avenue. The district wants to put a library on the site but can’t afford to buy all the land. Under the plan, the city would buy the land and the district would buy part of the parcel from the city. There has been discussion about the city using its share of the property to expand the adjacent Balfour Park. The asking price for the property has not been disclosed.