According to Mayor Jim Ferrell’s proposed biennium budget for the 2019-2020 fiscal year, not only will the city not borrow any money, the budget has room to pay back the $300,000 borrowed for the Performing Arts and Events Center at $100,000 per year for the next three years.
In his speech during the Greater Federal Way Chamber of Commerce luncheon on Sept. 5, Ferrell said Federal Way is at the point in time in his administration where it’s time to get “our financial house in order.” During his first term he focused the budget on helping to create a new downtown.
“In my second term, I’m shifting my focus to revenue sustainability and aligning our budget priorities to correct a structural imbalance that has been in place long before I was elected,” according to Ferrell’s speech.
The projected revenue for Ferrell’s biennium budget shows $22 million coming from charges to service, which are mainly permit fees businesses, developers and residents will be paying.
Another $18 million is projected to come from other financing sources, which Ferrell described as transfers of real estate excise tax funds or transfers from the general fund.
Other revenue sources include sales tax at $15 million, utility tax at $12.3 million, $12.2 million from intergovernmental, and property tax revenue at $11 million.
The total revenue projected for 2019-20 is around $112 million, an increase from the total adopted 2018 revenue, $95.5 million.
The listed expenditures Ferrell included in his proposed budget include $31 million each from the police department and the public works department, as well as $33.5 million under human resources, city clerk and the Performing Arts and Event Center.
The city’s overall operating expenditures total $104.6 million for 2019 and $97.8 million for 2020. Compared to 2019, this is a $4.7 million or 4.31 percent decrease from the 2018 projected estimate. This decrease is mainly due to a decrease in capital outlay due to the completion of the PAEC, according to budget documents.
Ferrell recognized the city of Federal Way needs to look for more revenue sources, and said City Council members also identified this as their top goal during the council retreat in February.
Ferrell praised the city and council for their “great track record” of addressing budget shortfalls, and being responsible stewards of taxpayer money.
An example of this he gave was how the council remedied the $854,000 deficit last March.
According to Finance Director Ade Ariwoola from Mirror archives, that budget shortfall was caused by the 2017-18 budget being approved without fully funding the city’s equipment replacement reserve.
The mayor’s proposed budget was created using a zero-based budgeting model.
The idea behind this type of model is to start at zero dollars when creating your budget, and add your expenses one at a time to the budget until all your expenses are accounted for.
In theory, this model is supposed to prevent poor spending habits and create a sound budget where all the needs of the individual or, in this case, Federal Way, are met without causing debt.
This biennium budget speech came the day after Ferrell presented his proposed budget during the City Council meeting Sept. 4.