Looking for ways to save money as they put together Kenmore’s newest budget, the city administration proposed cutting $1.2 million in consultant and contract services.
Presented to City Council Oct. 4, the proposed 2011-2012 budget also contained several much smaller expenditure reductions such as changes in employee medical benefits that could save Kenmore $60,000.
In terms of contract and consultant services, Kenmore currently pays outside sources for many everyday municipal activities, including police.
But City Manager Fredrick Stouder said by bringing some work in-house, even hiring a few new employees, the city could save significant dollars in the long run.
Though the moves may or may not be related to cost savings, the proposed budget contains monies for one additional police officer and three other staffers.
Overall, city Finance Director Joanne Gregory outlined estimated general fund revenues of $9.3 million in 2011 and $9.4 in 2012. At the same time, Gregory and her staff are recommending general fund expenditures of $9.2 million in the first year of the new budget, and $9.5 million the second year.
As in most cities, the general fund covers Kenmore’s routine, day-to-day expenses.
While officials have not done so for six years, Kenmore council is permitted by state law to raise local property taxes by 1 percent annually. Stouder said the city’s budget assumptions do not include that possible rate increase.
Still, in what might have been a sign of a debate to come, Gregory noted that adopting the 1 percent would add $20 a year to the tax bill of a Kenmore resident with a home currently valued at $400,000. Gregory added that if property values decrease by 3 percent as is expected, that same homeowner would actually pay only $2 more in property taxes next year even factoring in the 1 percent rate increase.
According to Gregory’s figures, the city has passed on over $760,000 in revenues by not taking the 1 percent increase in the past.
Historically, Kenmore budget discussions have not always been smooth. With Mayor David Baker absent, Deputy Mayor Milton Curtis presided over the recent presentation and purposefully shut down all questions and debate from council members. Curtis said legislators could submit questions in writing and would have plenty of opportunity to ask questions in the future, including during several budget workshops scheduled for this month. Councilman John Hendrickson did not like the idea of waiting.
Following the meeting, Hendrickson said that, for now, he had general “big picture” questions about the city’s sales tax projections. Staff showed the figures down markedly from highs in 2007, but staying fairly stable next year. Projections also showed those revenues dropping slightly in 2012.
Gregory described sales taxes as one key Kenmore revenue. But Hendrickson said he wasn’t clear how Gregory arrived at the figures presented. For some time, Hendrickson has been in conflict with the rest of council, claiming the city is heading for major budget deficits.
While she called sales taxes important, Gregory’s figures show property taxes as another significant Kenmore revenue source. As already noted, Gregory expects housing values to fall which, of course, means fewer property tax dollars heading to the city. At the same time, Gregory also said the $27 million in new construction that was added to the city’s tax roll this year is the lowest such figure since 2003. Other revenue sources also are down slightly.
For example, city figures showed Kenmore gas tax collections dropping about 1 percent next year. Further, liquor revenues may be lost if the voters approve ballot initiatives that privatize liquor sales.
Should those ballot issues pass, Kenmore and other municipalities would lose their share of liquor board profits. Locally, those dollars would equal about $300,000 over the next two years.
Despite some drops in revenue, Stouder insisted Kenmore is in better shape than many cities and noted the proposed spending plan does not call for any deep spending cuts. He did state he asked department heads to make some spending concessions in almost every budget line item. With, in his mind, an uncertain economy still ahead, Stouder repeatedly urged council not to dip into what amounts to Kenmore’s savings accounts. The city could have roughly $6 million in unassigned funds available to it by the end of 2012.
