Taxpayers may be asked to shell out more money to maintain city services or face the possibility of cutbacks as the city budget faces projected shortfalls in coming years.
Since the start of the year, City Council has spent hours hearing consultants and city staff describe the less-than-ideal prospects for the city’s budget.
Though the $1.5 million deficit expected by the end of 2016 is less than the once-expected $3.4 million shortfall, the fact is the city will likely be in the red this year. And the next. And the next.
If that sounds familiar, it’s because the city has had to dip into reserves nearly every year since 2008.
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The general fund reserves can make up some of the shortfall, but even if the city were to keep the same number of staff members and not start any new programs, any wiggle room in those reserves could be depleted in two or three years.
Rather than wait for that cushion in reserves to disappear, city staff and the council are looking for ways to make more money or save on costs with programs that could take a few years to put in place, such as forming a regional fire authority, said Rick Sepler, city planning director.
City Council will talk about the schedule of options during its afternoon meeting Monday, May 16.
The following are all options being considered but may or may not be approved or go before voters.
▪ EMS levy: City Council has already asked the county to put an emergency medical services levy before voters this fall, in order to sustainably fund the county’s ambulance system, which has been depleting its reserves.
▪ Metropolitan parks district/Greenways levy: Council members will discuss options for paying for and maintaining parks on Monday. Members will consider asking voters to fund another Greenways levy or asking voters if they would be OK with forming a metropolitan parks district to collect money for parks in a similar way to Greenways, but without the expiration dates that have come with previous Greenways levies.
▪ Lean processes: The city continues to look for ways to be more efficient at providing services.
▪ Whatcom Museum and Mount Baker Theatre: The city helps pay for the museum and theater each year but could ask each to move away from reliance on city funding.
▪ Regional fire authority: The city will start exploring what a regional fire authority might look like. It would involve partnering with at least one outside fire district and would likely shift some of the costs, as well as control, out of the city’s hands.
It could take a few years to figure out whether the option could be good for the city, Sepler said.
▪ Levy lid lift: The city could bundle requests for any or all of the above into one request, and ask voters to allow the city to tax them more than allowed by default under state law.
▪ Library annexation: The city would consider options for combining city library services with Whatcom County’s library system.
“We acknowledge all along that not all of them will pan out,” Sepler said. “So we want a couple on the plate to implement that strategy. It will be based on which are most likely to succeed.”
Though the city has a few years to figure things out, Sepler said, it’s prudent to look at options before they become absolutely necessary.
I think it is our duty to identify how we are going to pay for these things and what that looks like for taxpayers and citizens.
Brian Heinrich, Bellingham deputy administrator
Both the city and county have said they want to be strategic before asking voters for large sums of money year after year.
“We provide a great deal of services, we have a great deal of needs, and we think that is what the community has asked us to do,” said Brian Heinrich, city deputy administrator. “I think it is our duty to identify how we are going to pay for these things and what that looks like for taxpayers and citizens. We welcome that conversation, and it’s one that’s timely and we need to have.”
The city’s policy is to keep at least 12 percent of the annual general fund budget in reserves.
For 2016, that reserve should sit around $9 million, which would pay for about six weeks of operations, said Brian Henshaw, city finance director.
If all goes as expected this year, even with the projected deficit the city should have about $14 million left. In other words, there should be about a $5 million cushion on top of the required reserve.
One of the largest factors playing into the estimated deficit for the 2015-16 biennial budget is the retroactive payment of three years of cost-of-living adjustments negotiated with nine city staff contracts.
“We ended last year positively, but the reason was largely due to the unsigned contracts, which have now been signed and paid out in 2016,” Henshaw said.
The last unsigned contract, which is expected to be fairly large, is with some fire department staff, Henshaw said. Once that’s paid for, the picture of this year’s shortfall will be more exact.