Auburn’s taxpayers have been hotly demanding of city leaders lately to reveal how they could have gotten things into such a pickle that within a few short years the city may be running multimillion dollar deficits.
Given the booming economy, the culprit must be, has to be, has got to be, the disgruntled say, a city gone ape with its checkbook.
Their message: tighten the belt.
But the budgetary analysis Finance Director Shelley Coleman presented to the City Council on Monday evening painted a picture of many moving parts and variables, summing to a problem city leaders say simple spending cuts alone cannot solve.
The real challenges, said Mayor Nancy Backus, are these: where will the city find revenue streams to the general fund in the future to support the growth that’s coming; and where will it find quality personnel and how will it pay them competitive wages and benefits so they stay to do the additional work needed when the city’s population hits, say 100,000, given a raft of sharp increases in costs over which the city has little to no control?
Backus noted that for every dollar of property taxes residents of Auburn pay, the city only gets 14 cents back.
As Coleman’s analysis showed, costs in nondiscretionary items like salaries and benefits, existing contracts with the SCORE jail and with Valley Com, to name only a few are on the increase. Even items, like streetlights and fertilizer for city parks, though they are discretionary, don’t present the city much of an option.
Also, the city is staring at the loss of millions of dollars owing to the Legislature’s decision to end streamlined sales tax mitigation funding to the state’s cities this September.
Yes, tightening is always good, Backus said, but cutting the city’s pencil-and-paper supply in half, as some have suggested, by itself won’t solve the problem. And if the city doesn’t solve the dilemma, it will have to lay off personnel even as population growth puts greater and greater demands on the city.
“At a time when our city is projecting growth, it’s really a challenge to say we are going to cut people, and yet we are going to have more people coming into our city,” Backus said. “Can we cut discretionary spending? Absolutely, we all can. But that is not where we are going to find the answer to this issue. The answer to this issue – as much I hate saying it – is going to be looking at new revenue streams.”
Translation: hikes in taxes and fees to cover the rising cost of services as fundamental as policing, which the general fund pays for.
“We definitely have to maintain our basic city services, no matter what, things that are essential, like emergency management, the basics that we fund under the general fund,” said Councilman Claude DaCorsi. “ … Our policing services, naturally, have to be maintained, and we just have to continue on, regardless of where we are, and come up with solutions as we go forward.”
DaCorsi recommended that up to 2024, the city maintain its present base of 450.6 full-time equivalent employees, but allow for adjustments as they are needed over time. But, he noted, without major cutbacks, 450.6 FTEs won’t be able to sustain city services in a city of 100,000-plus residents
He suggested that with the help of department directors, the city examine city-provided programs that are funded by the general fund to scope out any possible modifications.
Here are DaCorsi’s suggested revenue measures and options for the next four to five years:
• A voter-approved, perhaps permanent, levy lift, generating $2 million in the first year with 1-3 percent incremental increases yearly over the next five years. The dollar impact per year for the levy lift, he said, would be between $28 and $55 total for the lift per year for each household that pays into property tax;
• A 10-cent-per-square-foot business and occupation tax, affecting only the 20 million square feet of warehousing, manufacturing and mini-storage space in the city;
• An increase in the gambling tax for the years 2020 to 2024 from its present 4 percent to 10 percent;
• And an overall budget reduction and modification for the years 2020-2024, beginning with a $1.5 million reduction for the years 2021 and 2022 and then a $2 million reduction in the years 2023 and 2024, summing to a $6 million reduction in the city’s overall budget over those years.
Coleman presented two of her own options as follows:
• A $2,000,000 voted levy lid lift beginning in 2020;
• A 10-cents-per square-foot B&O tax on warehousing, manufacturing, mini storage, retail and office, beginning on Jan. 1, 2020 – $2.7 million
• A 1 percent increase in city-owned utility taxes, starting on Jan. 1, 2020 – $484 000 to $740,000 annually
• An increase in development fees to recoups costs – $300,000 annually
• A reflected increase in the city’s investment income.
• A $2 million voted levy lid lift beginning in 2020 with a 1 percent increase
• An additional 10-cent-per-square-foot business and occupation tax, but, unlike her first option, affecting only the 20 million square feet of warehousing, manufacturing, and mini-storage space in the city. Starting next January it would generate an annual $2.25 million; and
• A 2 percent increase in city-owned utility taxes, starting Jan. 1, 2020, and generating $1.4 million to $1.5 million annually.
Councilmember John Holman, a former police officer, noted that Auburn has recently been listed among the top 20 safest cities in the state. It made that list, he said, by having a police department with a ratio of one officer per 617 residents, which compares well with Federal Way’s one officer per 617 residents, and Kent’s one officer per 669 residents.
“To function at that high of a level means we are recruiting and retaining good police officers,” Holman said. “We are in a climate now where other cities are giving signing bonuses to hire away good, trained police officers. They can earn a $15,000 signing bonus by signing with another city. To combat that you need a good salary-benefit package. Eighty percent of the police budget goes into wages of police officers and staff.
“It’s not guns, bullets and shiny stuff that keep us in the top 20. We cannot cut our way to a resolution on this,” Holman said.
The city has not decided on any potential options.