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$750,000 hole in city streets
By ERICA HALL
Revenue has experienced dramatic highs and lows this year, but the ultimate affect on Federal Ways bottom line has been an even wash.
The city will have $750,000 less with which to pave the roads since the state Supreme Court upheld Initiative 776, the $30 license tab fee initiative. City finance director Iwen Wang said I-776 represents a 25 percent hit to the citys street maintenance budget.
Theres enough money in the city managers contingency fund to cover the loss for 2003 and 2004 ($1.5 million for both years combined), but officials will have to figure out a way to fund street maintenance in the long run, Wang told the City Council Nov. 4 as part of this years biennial budget adjustment process.
In addition, finance staff told other city officials that Federal Way is experiencing a $494,000 shortfall in sales tax revenue, but increases in other revenue streams and salary reductions resulted in very little impact to the citys bottom line.
According to the September 2003 quarterly financial report, real estate excise tax revenue is up 61 percent to $862,889. Court revenue is up 30 percent to $208,986, though an increase in probation costs set the net revenue closer to $150,000, according to officials.
State-shared criminal justice revenue also was up to $160,000, and property tax revenue was higher than anticipated at $175,000.
Still, Wang said the city will have to fill the $750,000 loss to the street maintenance budget in order to keep up with road maintenance. Councilwoman Mary Gates reminded council members that the cost of rebuilding unmaintained roads far exceeds the cost of regular maintenance.
Wang said its hard to say for certain how I-747, which limits the amount governments can raise property taxes to 1 percent a year, would affect Federal Way.
The city usually only raises the property tax to keep up with inflation, she said, so the limit probably only would impact the city by the difference between inflation and 1 percent.
Slow revenue growth, increasing employee benefits costs Wang said theyve gone up by 50 percent in three years and ongoing federal, state and county government budget problems could create added pressure for city officials in upcoming budget cycles.
Soon after the council approves adjustments to this years biennial budget, the heads of the city departments police, law, public works, council, finance and others will begin meeting with their staffs to determine budget needs for 2005 and 2006.
Capital budget adjustments this year include tweaking the cost for the city hall/municipal facility from the initially anticipated $24.5 million to $15.3 million.
City officials said last year they wanted to budget enough money for a cops, courts and city government building, but werent sure if they were going to need it all. They selected a spot in the middle of the range of options presented by the Municipal Facility Advisory Committee, a citizen group that explored several siting options for city officials to consider.
As it turned out, InsigniaKidderMathews, a commercial real estate firm, offered the city the Paragon building, a large, glass-enclosed office building at 33325 Eighth Ave. S., near the current city hall. The total cost of buying the building, acquiring adjacent land for additional parking and closing costs was about $8 million. Interior renovations and construction of the nearby parking lot put the cost closer to $15.3 million.
Because the Paragon building has 11,000 square feet more than the city needs, city officials in early discussions decided to carpet and paint the extra space and build ceilings, but to leave the area undesignated until they had a better idea of what it would cost to improve it. Officials now are recommending the city allocate $519,000 to improve the additional space, including painting, carpeting and installing ceiling in 6,000 square feet that will remain vacant.
The other 5,000 square feet will be developed into a larger combined emergency-operations center and community meeting room, a committee meeting room adjacent to council chambers, and office space for the fire prevention bureau to create a combined permit center.
In addition, officials are recommending the council allocate $145,000 for furniture items for the extra meeting rooms, the court rooms and the lobby. Officials have said they still intend to salvage as much furniture as they can from the existing city hall.
On another capital project, officials will make final approval of a funding quilt they pieced together to pay for the community center, senior center and swimming pool project slated for construction in Celebration Park in 2005-06.
Council members already have discussed a plan to pay for the center during community center updates, but they still must formally approve the plan as part of the 2003-04 budget adjustment process.
To pay for the community center, finance officials are recommending transferring $700,000 from the general fund and using $1 million in real estate excise taxes to cover part of the costs. The city also will issue a $15 million bond, for which the city raised the utility tax 1 percent last year.
Officials anticipate receiving $94,000 in interest earnings on invested money to direct toward the project, and another $800,000 in equity from the Klahanee Lake Community Center could help pay for the new community center.
City officials plan to transfer $1 million from the arterial street fund to build a road at South 333rd into the park to the community center.
Staff writer Erica Hall: 925-5565, firstname.lastname@example.org