The Issaquah City Council adopted the final 2020 budget at its Nov. 18 meeting after months of deliberation.
In September, Mayor Mary Lou Pauly’s proposed 2020 budget forecasted a shortfall of $5.2 million dollars, and it suggested various tax increases and city service cuts in order to balance. The council discussed at length how to bridge the gap during six budget study sessions in October and November.
After deliberations and council revisions, the final 2020 budget outlines $143.1 million in expenditures, including $49.8 million of general fund expenses. Projected revenues for the budget total $133.7 million. An overall resulting decrease in fund balance of $9,402,861 is expected.
In total, the budget for all city funds is down $1.8 million from the adopted 2019 budget of $144.9 million and the general fund is down $3.2 million from the 2019 budget.
Ultimately the council decided on several changes, including lowering the proposed utility tax rate increase from 6 percent to 3 percent. They also lowered the proposed increase on Senior Gold Pass cost from $120 per year to $60 per year for residents and from $144 to $72 per year for non-residents. They also restored funding to maintain the community center and swimming pool hours of operation at the 2019 level.
The adopted budget restores funds for community grants and contracts for service. It also adds funding that supports integrating Strategic Plan environmental objectives into work on Title 18, the city’s land use code. Additionally, it will draw $196,211 of fund balance to support a City Service Assessment.
The council also has asked the administration to look into several policy priorities in 2020, including developing an assistance program to help low-income residents with the impacts of increased taxes and fees.
The adopted full 2020 budget can be read on the city’s website. (https://bit.ly/35k4qrw)
Council members thanked the staff for their work on the budget, acknowledging the difficulties throughout the process.
“I really appreciate the team that worked on this, particularly the finance department,” Councilmember Stacy Goodman said. “In my personal opinion this was the best presented proposed budget that I have ever seen.”
Councilmember Tola Marts echoed that sentiment.
“This has been, going into it, one of the most challenging budgets that we’ve had in my ten years on council. But, owing to superb presentation and support from city staff and off of deliberation on the part of council we have arrived at a solution,” he said.
“We have some big challenges in front of us next year,” he added.
Councilmember Paul Winterstein voted against the budget, which passed six to one.
“If I could have it my way, we wouldn’t have raised the taxes, we would have reduced spending even more, and we would have temporarily used fund balance,” he said. He asked that the council commit to reviewing utility taxes next year and consider resetting the utility taxes to their pre-2020 levels.
“I respect the process. I’m one of seven. And I’m as proud of my city as I have ever been,” he said.
While the budget’s total expenses exceed total revenues by more than $9 million, finance director Beth Goldberg said that difference is technically not a deficit because the budget is fund based and the city will spend money from its various dedicated funds.
Each of the dedicated funds has a substantial balance, and Goldberg said it is normal to draw from those funds and they should be investing some of them. Each fund is earmarked specifically for certain types of expenses and can only be spent in certain ways.
For example, the bulk of the spending to cover the $9 million dollar difference will come from the enterprise fund. That fund is comprised of the money from the city’s water, sewer and stormwater utilities. That money can only be spent on utilities.
The enterprise fund will have a 2020 starting balance of $29.3 million. Then the anticipated revenue from utilities in 2020 is $32.5 million and the expenditures related to utilities total $36.3 million. So, there is an expected difference and overall draw from the enterprise fund of $3.8 million. The ending balance is estimated to be $25.4 million.
The bulk of city services are paid for by the city’s general fund, which is expected to decrease from a starting balance of about $13.7 million to an ending balance of $13.4 million, a difference and draw of $196,211. That difference is created by an anticipated $49.8 million in expenditures but only a $49.7 million in general fund revenues.
Goldberg said the previously discussed general fund deficit of $5.2 million in the proposed budget was closed with new revenues and reductions.