Federal Way will once again adjust its budget in response to the economy.
The mid-biennium budget process is set to take place in November. Revenue projections made during the June undertaking are already off-base, and more alterations are needed, interim city manager Brian Wilson told the city council Oct. 6.
“We’re going to need to make some adjustments to the 2009 budget, to balance, as well as the 2010 (budget),” Wilson said.
Without this, the City of Federal Way could find itself short anywhere from $300,000 to $720,000 by the end of 2010. Among recommendations Wilson informally highlighted is the reallocation of $2.011 million previously set aside for the purchase of Camp Kilworth, the 25-acre Boy Scouts of America property overlooking Puget Sound. Balancing of the budgets will depend on whether a previously approved wage decrease for all city employees will be accepted by the staff’s labor unions, along with red light photo revenues.
In June, the original 2009 budget was adjusted to avoid a projected budget gap. City management passed a budget they thought would permit them to sidestep a 2009-2010 funding shortfall.
Current budget
The economy has been slow to bounce back. Major tax revenues — sales, criminal justice sales and gambling taxes — are $550,000 below management’s revised projections. Property tax is $125,000 more than projected, meaning projections for major tax revenues are short by $425,000 ($125,000 in property tax revenues, minus a $550,000 major tax revenues shortfall).
Other revenues are $390,000 below projections. But criminal justice high crime and recreation fees are $360,000 above projections, meaning estimates of how much the city expected to be collecting from other revenues are $30,000 below projections (that’s $360,000 criminal justice high crime and recreation fees revenues, minus a $390,000 other revenues shortfall).
One-time capital and one-time operating expenditures of $530,000 also contribute to the projected shortfall. Initial start-up costs for the SCORE jail facility were $350,000 more than management expected. The upcoming general election is expected to cost $75,000. Various other costs, including the Han Woo-Ri festival and the city manager search, amount to $105,000.
Wilson said he will urge the city council to redirect previously allocated Camp Kilworth money toward current and upcoming budgets. Wilson plans to recommend that utility taxes amounting to $300,000 be applied toward the 2009 SCORE start-up costs. A total of $411,000 in general fund and interest earnings will likely go toward the one-time 2009 expenditures, leaving a surplus of $181,000 ($711,000 in redirected Camp Kilworth funds, minus $530,000 in one-time capital and operating expenditures).
2010 brings more troubles
Next year will bring a larger projected revenue shortfall if the budget is not adjusted. Major tax revenues, including property tax, are now expected to be $680,000 below previous estimates. Other revenues are predicted to come in $440,000 less than previously projected. Recreation fees, at $175,000, is the only area looking to exceed projections. This leaves Federal Way facing a revenue deficit of $945,000 ($175,000 in recreation revenues, minus a shortfall of $1,120,000 in major tax revenues and other revenues).
To help address the shortfall, real estate excise taxes that were to go toward the camp purchase are now likely to be redirected. A $500,000 contribution will restore the 2010 Arterial Streets Overlay program to the $1.9 million budget it has maintained in past years. The program’s funding was slashed in June. The previously scheduled slice in funding would have left the streets noticeably damaged had the funding not been restored within coming years, public works director Marwan Salloum said at the time.
“This is an investment,” Wilson said. “It will serve us well.”
Another $800,000 in real estate excise tax is expected to cover 2011 SCORE costs.
Additionally, a predicted $220,000 in 2009 and another $220,000 in 2010 red light photo revenues are currently unallocated. The red light photo money can be used for traffic safety, enforcement, education and engineering. An estimated $400,000 in 2009 real estate excise tax is also currently unallocated.
Instilling the 2 percent wage cut for all city employees, which was approved by the council in June, is also part of the plan to make up for some of the city’s lost revenues. However, negotiations with labor unions are ongoing, Wilson said. There is no guarantee the city will secure that wage cut, which could save $420,000 in the 2010 budget.
The city council thanked Wilson for providing up-to-date financial information, but is not scheduled to take official action on the budget until next month.
“This is a very timely, proactive financial measure,” city council member Mike Park said.
