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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Funding a city’s needs a challenge

Bill Gothmann Staff writer

Our home budget is simple. Everything comes out of the same pot. Expenses for the house, rent, food, savings, all of these form the family budget.

Governments, on the other hand, have a number of pots servicing a variety of governmental activities. Each pot has its own purpose, restrictions, sources of funds and expenses.

Police services are financed by our general fund, where they make up 59 percent of the expenditures from this account. Note that this is an ongoing, year after year, expense. Eighty-one percent of this fund’s revenue comes from two primary sources: property taxes and sales taxes. Thus, to a large extent, when you think of the general fund, you think of income from property taxes and sales taxes and expenditure for police services.

The method of funding the general fund provides an interesting dilemma for city officials. Police service financing is an ongoing need, but the sources can vary significantly from year to year. Sales taxes can change greatly, depending upon the economy, and property taxes are limited to a 1 percent increase per year, whereas expenses for police services increase about 6 percent per year.

The way we deal with the variability problem is to bank some funds during the good years so we can draw on those funds during the lean years. Dealing with the long-term deficit, however, will continue to be a problem.

Street maintenance, on the other hand, is funded from a different fund, the street fund. Street expenditures are continuous. We have to plow, sweep, sand and patch every year. At the present time, the fund income comes from gasoline taxes and a one-time windfall we received from county road taxes upon incorporation.

Again, we have a dilemma for the council. First, as gas gets more expensive, fewer gallons will be consumed, and we get paid by the gallon. Effectively cities are penalized if citizens use less gas. This is a case where one public policy is out of sync with another public policy.

The second street fund challenge we have is that our gas tax receipts for 2008 are expected to be $2.2 million, but we expect to pay out $4.2 million. This deficit is expected to grow in future years. The City Council will be spending considerable time this year trying to develop a solution for this problem.

This leads us to City Hall. “How can we afford such an expense?” you ask.

First, we should note that we are already spending $438,000 per year renting our present facility. That is probably not the optimal use of public funds when we could be accumulating an equity each year.

Second, we should note that during these good economic times, we have, through wise planning, set aside $5.8 million for just such a one-time expense. Again, it is prudent that we try our best to get into a purchasing position so citizens can receive the best bang for their housing buck. We don’t have all the details worked out, so stay tuned.

I have to confess, trying to manage the citizens’ dollars is, indeed, a challenge. However, we have an obligation to you to be good stewards of the funds you have entrusted to us. This includes making astute decisions as we plan for funding our policemen, our streets and our City Hall.

Bill Gothmann is a member of the Spokane Valley City Council.