Summary: Edmonds' Past Efforts at Budget Reduction

The following article was provided by Shawn Hunstock, finance director for the City of Edmonds.

As the City begins to prepare for developing a budget for 2013, one which could have a deficit of $800,000 to $1 million based on current projections, it might be helpful for Edmonds residents to have a summary of some of the more significant past efforts taken to address the economic downturn and the impact they’ve had on City finances.

Below are some of the items that have been implemented since 2000 in order to successfully achieve balanced budgets through year 2012 despite declining revenues over the past few years.

Expenditure Reduction Efforts

In 2001 the City became part of the Sno-Isle Regional Library system. At the time, this saved approximately $1 million in the City’s budget. In 2003 the City’s budget forecast showed expenditures growing faster than revenue. In order to reduce the overall level of expenditures, 23 positions were eliminated from the budget, saving approximately $1.2 million per year, bringing the City of Edmonds to one of the lowest employee per capita cities in Snohomish County.

The City implemented general overall expenditure reductions in 2008, saving approximately $390,000, and in 2009, saving approximately $2 million. The expenditure reduction effort in 2009 included the elimination of three employee positions in addition to nine furlough days for many of the City’s employees. The City also entered into a contract for fire services with Fire District #1. The contract was a way to cut costs initially and control future cost increases for fire services.

In addition to the large cutbacks that have happened in the past, departments are continuously looking for other ways to reduce costs. For instance, many documents, such as the City Council agenda packets, are now produced electronically rather than being printed. The City also changed health care plans beginning in 2011 saving money each year on the City’s health insurance costs. The City also updated its insurance coverages and deductibles in order to save on the cost of insuring vehicles, equipment and buildings.

Revenue Enhancement Efforts

The Emergency Medical Services property tax levy (voter approved) and EMS transport fees are two recent options enacted by the City to recover a portion of the cost of providing emergency medical services to Edmonds residents and visitors. Changes to utility tax rates have also helped recover some of the cost of providing services to the City’s utilities such as legal, finance, human resources and clerk’s office, among others.

The Transportation Benefit District (TBD), which began in 2009, now provides a much needed funding source for critical street improvements. The TBD collects $20 per vehicle license fee per year and can only be used for street preservation, maintenance and operations.

Beginning in July 2008, the City benefited from a change in the way sales tax was reported to the Washington State Department of Revenue. Prior to that, sales tax was reported based on the location of the store, warehouse or online business making the sale. After the change, sales tax is now reported based on where delivery of the purchased item takes place.

The City still receives credit for sales tax from auto dealerships, for instance, because delivery typically takes place at the dealership location. With a relatively large residential base, the City benefits from sales tax on goods delivered to Edmonds residents. These types of purchases include furniture and appliance deliveries made within the City, and online purchases if the seller collects sales tax.

Ongoing Budget Issues

As mentioned earlier, it is expected for 2013 the City will have a budget deficit of $800,000-$1,000,000. This estimated deficit will grow each year reaching approximately $3 million in 2016. The City will spend a good part of 2012 looking for ways to address the growing deficit.

This includes reviewing additional options for expenditure reductions and potential new revenue enhancements. Residents will have opportunities to provide feedback on the budget during public hearings later this year as part of the City’s budgeting process.