City Council spends retreat working on 2011 budget

October 4, 2010

By Tim Pfarr

Public invited to town hall Oct. 28

City officials began work on the 2011 budget in September, beginning with a seven-hour budget retreat Sept. 7.

The City Council met with City Manager Rob Wyman and Finance Director Christine Olson to set priorities and give direction to members of city staff for the budgeting process.

The budget process

The first copy of the preliminary budget will be distributed to the council at the Oct. 19 meeting. In accordance with budgeting policies adopted by the council earlier this year, city staff will not be able to present a budget containing a deficit. The first public hearing regarding the budget will also be held Oct. 19.

Next, the city will host a town hall meeting Oct. 28 in the Saint Andrews Ballroom at The Golf Club at Newcastle. Citizens will be invited to speak about finances or other city issues. The meeting tentatively has a 7 p.m. start time.

Wyman said the city is hoping to get “pulse pads” — remotes that allow for instant feedback from the audience — from the Association of Washington Cities for the meeting.

“We’re going to try to make it as fun as possible and lively,” Wyman said. “The whole point is to hear from citizens about those issues and anything under the sun. We’re there to listen.”

The city will hold its second public hearing on the budget at the Nov. 9 council meeting, at which time it will also hold a public hearing on city revenue sources. The third and final public hearing will be at the Nov. 23 council meeting, and the council will adopt the property tax levy and levy rate at that meeting.

Finally, the council will adopt the 2011 budget at its Dec. 7 meeting.

The budget retreat

According to Olson’s budget forecasts for the next five years, the city will have used up its ending fund balance by 2016. Sales tax drove the city’s revenue until the late 1990s, and then development drove the city’s finances until the mid-2000s, at which point the city’s financial trends turned downward, she said.

Throughout the afternoon, the council discussed possible changes the city could make to mitigate its financial hurdles.

Among the items council members discussed were reducing or eliminating funding for A Regional Coalition for Housing, finding ways to keep the cost of its police contract from rising, possibly transferring ownership of pocket neighborhood parks to homeowners associations, and finding ways to collect unreported sales tax revenue.

They also discussed changing city employee health insurance plans, freezing employees’ cost of living adjustments and limiting employees’ merit pay raises. Councilmen Rich Crispo and Bill Erxleben also suggested eliminating city department manager positions.

Council consensus on major items

The city previously contributed $53,000 per year to ARCH, which funds housing projects for people with low and moderate incomes. During budget trimming earlier this year, the council reduced its 2010 funding to $3,000, which, at the time, the council said would be a one-time cut.

The city has contributed to an ARCH housing trust fund for about 10 years, and it has made about $500,000 in contributions during that time.

The money the city contributed went to purchase about two-dozen units of housing in King County. During that time, ARCH assisted with building 12 units of affordable housing in Newcastle, in the Coal Creek Terrace Apartments.

The council directed Wyman to explore alternatives to affordable housing that could yield more affordable housing projects within city limits. Among the options Wyman will explore is the use of accessory dwelling units.

The council also directed Wyman to take steps toward keeping the city’s police contract from rising in cost next year. Wyman said he is now talking with the King County Sheriff’s Office to explore possible changes to levels of service in the city to prevent such an increase.

However, Wyman said it is ultimately up to the citizens what kind of service changes are acceptable.

“This should be something that’s up to the citizens,” he said, adding that the town hall meeting Oct. 28 will provide citizens an opportunity to offer input about the topic.

The council concluded that transferring ownership of pocket parks could raise legal questions concerning liability and how public the parks could remain.

Councilwoman Carol Simpson spoke against the privatizing of parks, and Councilman Sonny Putter spoke in favor of keeping parks open to anyone who wants to use them, regardless of ownership.

“By going backwards and restricting access, we become much, much less of a city. Much, much less of a community,” he said at the retreat.

Crispo and Deputy Mayor Steve Buri will discuss the matter with their respective homeowners associations — the Highlands at Newcastle and Madison Lane — to see if either is interested taking part in a pilot program involving transfer of ownership.

No steps have been taken yet to transfer ownership of any park.

Sales tax revenue

Unreported sales tax revenue is a problem many cities face, but Newcastle has been hit particularly hard because few businesses are located within the city.

Companies are supposed to report sales tax in the city in which they performed services, but they sometimes instead report the tax in the city in which they are based, so this becomes a major issue for small, residential towns.

Some do not report sales tax at all, or operate without the appropriate business permits.

“There’s a lot of that stuff that goes on every single weekend,” Crispo said about businesses operating without licenses.

Jack Helm, the city’s building inspector and code enforcer, makes trips through the city in search of unlicensed businesses or projects, but this can do little to ensure correct reporting of sales tax revenue.

New health plan will save money

City staff will also be switching to a new, cheaper health plan next year. The amount of coverage for employees and family members will also decrease from 100 percent and 90 percent to 90 percent and 80 percent, respectively.

Wyman said he is also exploring AWC’s Healthy Cities program, which requires the city to go through a series of steps promoting wellness and healthy living among staff members.

Completing the program would reduce healthcare costs by 2 percent for the city, but Wyman said the program could be difficult to implement without a human relations staff member, who would typically coordinate the program.

Also, at the recommendation of the Salary and Benefits Committee, city staff members will not receive a cost of living adjustment next year, and merit pay increases will be limited to 2.5 percent of annual pay. Previously, employees could earn a merit pay raise of as much as 4 percent per year.

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