A special retreat on Sammamish will be scheduled in July focusing on city finances, the looming operating deficit in 2020 and how to fund road and stormwater projects. New taxes and new debt will be key points at the retreat.
Council Member Tom Odell essentially floated the idea of a 2% utility tax, which would raise $2m, by asking how much this amount would support in new bonds. This will be one of the points to be discussed at a finance retreat.
Member Ramiro Valderrama asked that franchise fees on the two water districts serving Sammamish and potentially contracting out stormwater management (presumably to the water districts) be included.
Reaching out to public
City Manager Lyman Howard called for a public outreach in advance of the retreat. An in-person town hall meeting was recommended. An education campaign is necessary, said Beth Goldberg, a staff member.
Odell suggested a statistically valid city-wide survey, but no decision was made.
Capital spending requires new funding
Capital spending for roads and stormwater management will require new funding. Bond debt will probably be favored, supported by new taxes.
“Frankly, this city was not done a very good job in infrastructure,” said Odell. “Roads are inadequate. Stormwater management] was inadequate. It’s going to take money. It may be time to pull the trigger on some options. The first place I would go is a utility tax.
“As much as I don’t want to raise taxes…it will hurt people on fixed pensions. It will hurt on the lower end of the wage scale. I’m for looking at tightening down expenses. I have some ideas. Ramiro has some ideas. [Council member] Christie [Malchow] has some ideas. The need is out there to improve infrastructure. We have to improve roads and infrastructure.”
Operating fund deficit
Sammamish is heading for an operating fund deficit in 2020 (the so-called crossover point), based on current projections.
However, this is a conservative outlook, said Howard, the city manager.
“We tend to budget conservatively,” he said. “We tend to underestimate revenues and over-estimate expenditures. The inflection point is probably two years later.”
The operating deficit is forecast to be $600,000 in 2020, increasing by this amount every year thereafter.
But, said Odell, “the elephant in the tent is the ending fund balance, from $60m in the bank to less than $20m. The crossover point continued to move to the right. However, the bigger issue is the need to do all the stuff in the city, road-wise, stormwater-wise, and this is going to take money.”
Avoiding the issue
“What’s been consistent is the council avoiding this issue,” said Valderrama, who began first raising the alarm in 2015. “If anything, the state is going to take away revenue. Sound Transit 3 is going to kill us on car tabs. There is an option of franchise fees on water districts.
“There is a need to look at, have we gone too far [on hiring employees to 114.75 FTE today]? Can we do more contracting? Did we need to go from 68[FTEs] to 90 to 114?
“We need to look at the property tax we’ve been banking all these years. What are we going to start looking at proactively?
“It’s time we start taking a look at bonds for roads.