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Assumptions guide Federal Way's 2013-2014 budget forecast
With the state and local economy still foundering, Federal Way is trying to stay afloat by preparing its 2013-2014 budget ahead of schedule.
The usual start date for planning the 2013-14 budget was set for June 2012. However, city staff have been working on the 2013-14 budget since November of last year.
During the June 7 city council meeting, Mayor Skip Priest and city finance director Tho Kraus presented an early version of the city’s biennium budget for 2013-14, touting it as a “Pathway to Sustainability.”
Priest laid out the ground rules that staff have been operating under while crunching the numbers. Priest said five guidelines were deemed important to a sustainable budget. Those guidelines are:
• Preserve high quality service levels currently offered by the city.
• Preserve staff jobs.
• Fund ongoing expenditures with ongoing revenues.
• Control costs.
• Maintain sufficient reserve funds to ensure flexibility.
“We have a chance, we believe, to be on the right path,” Priest said. “We have a chance to provide a sustainable budget.”
By following these guidelines and working within a policy of what the mayor calls “frugal innovation,” the city has been able to achieve some positive results for the 2013-14 budget. Here’s what has been accomplished so far, according to numbers provided by the city:
• For 2013, an originally projected operating gap of $1.7 million has now been reduced to $628,000. Also, a projected ending fund balance of $1.4 million has increased to $6.4 million.
• For 2014, an originally projected operating gap of $3.2 million has now been reduced to $446,000. Also, a negative ending fund balance of $1.8 million is in the positive at $5.9 million.
In order to achieve these results, the city relied on four major assumptions on the revenue side and two major assumptions on the expenditure side.
From revenue, the city is assuming there will be a continued “redirection of $600,000 a year in utility tax funding from the (street) overlay (fund) to the General Fund.” The city is also assuming that “state shared revenues (will) remain intact with no growth.” The third assumption city staff has operated under is a “one percent property tax increase as allowed by state statute and consistent with historical council action.” Finally, the city staff is assuming that there will be a “two percent sales tax growth projected per year.”
For expenditures, the city is assuming an “original projection (of) a general three percent increase for most departments and six percent for police, jail and dispatch services.” The other major assumption from the expenditure side the city in planning for 2013/14 is an “attempt to project based on more defined assumptions.”
Kraus, in a press release from the city, said these are a promising turn of events for the city, but that there is still work to be done.
“It’s early in the process and there are a lot of unpredictable factors in the economy,” she said in the release. “But the hard work of the council and the staff have put the city in a stronger position to address the 2013/2014 budget challenges and attain long-term fiscal sustainability.”
For more information on current or past budgets, or to view the presentation by Kraus at the June 7 meeting, visit www.cityoffederalway.com/budget.