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2013 revenues won't cover basic city operations
After several years of cutting it close but getting by, it appears the city of Bonney Lake is facing a major budget deficit for 2013.
According to City Administrator Don Morrison, the city's revenues are expected to come up nearly $900,000 short next year, primarily due to debt service, though the drop threatens even basic services.
"The revenues we project for next year will not quite cover basic operations," Morrison told the council during the Oct. 2 workshop. "It's going to be a challenge."
"It's a little bit lower than we thought," agreed Mayor Neil Johnson. "We have to look at it and figure out a game plan."
Morrison said revenues are declining in two major ways: Sales tax revenues are "flat" compared to last year, sales tax on construction is still "way down" due to the recession. In addition, utility fees, building permits and other sources are also seeing a dip.
At the same time, city costs, led by healthcare, continue to rise at a level Morrison said was "not sustainable."
"Costs just keep going up," Morrison said.
But the largest problem facing the city is the debt service on the 800 mHz communications tower and the bonds on the Justice Center.
Morrison said the tower debt comes to about $231,000 per year. The revenue was originally expected to come from the drug investigations fund, but Morrison said there has been no new revenue to that find for several years and the general fund has been forced to pick up the slack.
Bonds on the Justice Center come to about $600,000 per year and when it was built, the idea was for money from the Real Estate Excise Tax to help pay them off, but again, revenues are down in that department nearly 80 percent since a high water mark in 2007.
"There hasn't been that many home sales," Morrison said.
Morrison told the council he was able to cut the gap to about $500,000 through not filling positions and other internal moves, but the rest of the money will probably have to come from somewhere.
He also said the city's fund balance of $1.2 million is about the amount the city needs to keep on hand for cash flow in between receiving property tax money in May and November.
Morrison said he will meet with department head beginning next week, but he is not sure how much more they can cut out of their budgets after being asked to trim in each of the last four years.
"They've already cut back quite a bit," he said.
Johnson told the council he was working on a plan that would be presented to them for discussion in early November, but said he did not intend to raise any taxes within the city.
"I don't want to raise taxes," Johnson said Friday. "We have to stay within what we have."
Johnson said he is considering a recommendation to increase some of the fees within the city, such as the cost of a seasonal boat launch pass, but added "no one wants to nickel and dime things all day long."
The mayor also said he does not foresee a change in any staffing levels throughout the city.
"I don't anticipate layoffs right now," he said.
Johnson also promised to protect parks and community events from the budget axe because he said those things help create the sense of community that people expect in Bonney Lake.
"That's community-related," he said of the seasonal events calendar. "We want people to utilize their resources."
Johnson said he hopes to use the full two years of the biennial budget to try and make the numbers work out. In past years, the city has kept each year in balance, but the two-year cycle allows some leeway the mayor hopes to use to stave off cuts.
"I think if we take it as a biennial budget, it gives us a better chance to plan," he said.