City Council tackles expected revenue shortfall

September 6, 2012

By Christina Corrales-Toy

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Consolidating with Bellevue a topic discussed at annual budget retreat

At the city’s annual budget retreat in June, Newcastle City Council members sat down to discuss the options available to tackle an ominous financial forecast.

Among the topics discussed to remedy an expected revenue shortfall included staff reductions, imposition of a utility tax, outsourcing more city services and annexation into the city of Bellevue.

As the city begins to finalize its 2013 budget, City Manager Rob Wyman said potential shortfall fixes would be discussed at City Council meetings in the months of September and October.

At the June retreat, Finance Director Christine Olsen presented a six-year financial forecast, showing increasing deficits in the city’s general fund.

Wyman stressed that the forecast presented at the retreat was preliminary and an updated revenue forecast is coming Sept. 18, but he does expect to see a shortfall.

“At this point in time, once I get the numbers from my finance director, I’m assuming it’s going to be short to some extent,” Wyman said. “But at the end of the day, we’re never short until the council adopts the budget.”

Wyman said in the coming months, the City Council would have to mull potential shortfall fixes and set their priorities for the 2013 budget.

“A budget is how you prove what your priorities are and so they can make their decisions,” he said. “However, there are lots of ways to skin a cat.”

One such option, annexation into the city of Bellevue, was expected to be discussed at the Sept. 4 City Council meeting, Wyman said.

At the retreat, the City Council, after Councilman Bill Erxleben’s motion, agreed to put an informational discussion session about what it would mean if the city of Newcastle were annexed into the city of Bellevue on an upcoming agenda.

The discussion that will take place in September is preliminary. It is a conversation about whether or not the City Council wants to even discuss annexation.

“Putting it on an agenda to discuss whether to discuss it is a good idea, because it just pops up every now and then, and it’s distracting,” Wyman said. “So let’s figure out if it’s something we want to explore or not.”

Councilwoman Carol Simpson agreed that the Bellevue conversation has been a distraction for the city staff and the council.

“I think it’s a distraction,” Simpson said. “Our staff should be focused on better ways to do their work and more efficiently.”

Simpson did acknowledge that the conversation will, hopefully, give the public more information about their government.

“I appreciate the discussion because it brings out information for the public about the difference between how Newcastle taxes and spends compared to Bellevue or other cities, and it’s important for people to understand how the government operates,” she said.

Erxleben said that, in good management of the city, it is the council’s duty to explore all options available to help remedy the deficits, including reaching out to Bellevue for consideration.

“The bottom line is that we are in bad shape because as far as you can look forward we have deficits in our general fund,” he said. “My view is that before we take on a major tax increase or before we take on additional debt, what I want is to get our options truly on the table and have a good discussion and let the people decide.”

Wyman said he expected the Bellevue conversation to be a sensitive topic.

“It’s definitely sensitive,” he said. “It’s a loaded issue really when you think about it. From a very basic standpoint, it’s a city talking about potentially not being a city. It gets emotional for people certainly on either side of it.”

Erxleben, Simpson and Wyman agreed that the city is not currently in such a financial shape that it would need to be annexed into Bellevue in order to survive. But Erxleben said it was important to explore the option.

“Let’s get all the information on the table now so we can make a good decision before we get in really deep trouble financially,” Erxleben said. “We are not in really deep trouble now, but if our situation is as dire as it has been forecasted this summer, then I would say let’s have this preliminary discussion.”

Wyman said the city will have a clearer idea of its financial state, and possible shortfall fixes, once the updated revenue forecast is released in mid-September.

“You can kind of talk about it a little bit, but until you have the numbers and know the order or magnitude of the problem, it’s really difficult to really put a point on it and say let’s do this or not do this because if you are short $40,000 versus $400,000, it’s a much different conversation,” he said.

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