City budget surplus turns into a deficit
August 5, 2010
By Tim Pfarr
The nearly $53,000 budget surplus the City Council created earlier this year through cuts has turned into a nearly $44,000 deficit due to unanticipated expenses, according to the city’s second-quarter budget report.
The report estimates the city will have a $100,000 budget shortfall by the end of the year.
The city’s largest financial problem continues to be sales tax, which is down almost $65,000 from last year.
Retail and construction, respectively, are typically the two largest producers of sales tax revenue. In comparing the first six months of this year to last year, sales tax revenue increased from about $53,000 to about $58,000, but construction revenue plummeted from almost $59,000 to about $2,000.
However, revenue from building permits and the time the city charges to review them have already surpassed budgeted amounts. Permit fees have brought in more than $72,000, 111 percent of the budgeted amount for the year, and the time charged for their reviews has brought in more than $60,000, 144 percent of the budgeted amount.
Total revenue collected as of mid-year was almost $2.98 million, 51 of the amount budgeted for the year, and expenses totaled $2.87 million, 50 percent of the amount budgeted for the year.
“Right now, I don’t have any red flags sticking out other than sales tax,” Director of Finance Christine Olson said. “I’m cautiously optimistic.”
The city has also had unanticipated expenses, which Olson estimates to be around $83,000.
Those expenses include $5,000 paid to former City Attorney Lisa Marshall, who worked a month longer than expected, $4,000 in attorney fees from the negotiation of former City Manager John Starbard’s termination settlement, $12,000 in special elections expenses from last year’s primary election and $32,000 in unexpected police costs.
The police costs include unbudgeted overtime and pay raises. Interim City Manager Rob Wyman said the city works with the King County Sheriff’s Office to estimate overtime and pay raises, but the unexpected costs were particularly high this year because of an officer injury that required extra overtime.
Also included in the $83,000 are estimated costs of about $5,000 soon to be spent on a redesign of the city’s website; about $5,000 to be spent on outside assistance during the city’s negotiation with the Teamsters, which now represent the city’s maintenance workers; and about $20,000 to be spent on city manager recruitment with consulting firm Prothman and Associates.
The city also has unexpected revenue from community events, donations and sponsorships, which accounts for more than $17,000, and $20,000 in fines from significant code violations from two foreclosed homes.
The report said other city funds are in accordance with the budget, except for the Transportation Impact Fee Fund, which has a balance of negative $21,000 from debt payments for Coal Creek Parkway.
The Capital Investment Program Fund has collected 119 percent of what was budgeted for the year, and much of it is due to grant reimbursements from last year, according to the report. The city has spent about 44 percent of its budgeted amount from this fund.