Olympia is facing an initial $7.8 million deficit for the 2024 operating budget due to rapidly growing expenses that outpaced revenue growth in recent years, City Manager Jay Burney revealed at Tuesday's city council meeting.
In a presentation, Burney detailed the ongoing challenge the city is facing in achieving fiscal balance.
The city manager shared Finance Director Aaron BeMiller's 10-year financial projection that "paints a difficult future." Burney said the absence of new revenue options, such as state-level or levy lid lift conversation with the community, would result in budget reductions in the future.
For 2024, Burney said most needs expressed by the department could not be funded.
"There would be a limited expansion of programs that departments submitted,” the city manager explained, “about $9.6 million of requests for additional funds to continue to deliver their services."
Burney stated they asked departments to maintain a status quo budget level for all other expenditures not directly tied to contracts and obligations outside the city's control. He explained that any increases would only be considered if legally required or due to factors outside the city's control.
Burney presented figures showing that for 2024, general fund revenues are projected to increase by 5% while general fund expenses are estimated to rise by 12%.
The city manager noted that tough choices had to be made to bring the budget deficit to a manageable level through the 2024 proposal. As a result, several items he considers important priorities could not be included in the budget at this stage due to funding constraints.
The support staff positions are:
He said that as the city grows as an organization, many unfunded FTE requests were to help manage that growth across departments like legal, finance, HR, and IT.
Burney noted that departments had submitted $7.3 million in enhancement requests for new resources that could not be funded in the proposed budget. There were also around $500,000 in requests from community groups, including a request related to the urban agriculture work plan.
However, Burney included in the proposal the funding of:
Burney said these fundings would translate the city's deficit to about $9.2 million. But, after incorporating projected increases in costs such as wages and medical insurance rates and boosting revenue projections, the budget deficit is projected to reduce to approximately $6.7 million.
He said the staff would begin analyzing proposals to close the $6.7 million budget gap. Among the options he recommended considering was a reduction in funding for building repair and maintenance.
The city council opened the first public hearing on the 2024 Proposed Operating Budget. The second public hearing is scheduled for November 14.
Council of Neighborhood Associations Chair Larry Dzieza commented that the unavailability of a link for the budget for public review before the public process "diminishes the quality of the budget hearing."
Earlier, Burney acknowledged that the city usually provides a full draft budget document for public review prior to hearings. However, he explained that transitioning to a new financial system, Workday, has consumed substantial staff resources. He noted that the city remains in the process of implementing Workday, which has impacted the ability to publish a complete draft for this hearing as staff focus has been on the system changeover.
He added that the Finance staff will complete the draft budget for public review before November 14.
Dzieza also commented about the 2024 proposed budget, which maintained funding for the Neighborhood Matching Grants program at the same $23,000 level. "I doubt any other budget item has been frozen like this. Despite population growth, inflation, greater demand for neighborhood projects, and the desire for neighborhoods to do more outreach efforts to renters, this amount needs to be increased."
The CNA, he said, recommends setting the 2024 Neighborhood Matching Grants at $1 per Olympia resident, which would total approximately $57,000. He pointed out that this amount is similar to Lacey's $60,000 budget for their matching grant program, equating to $1 per resident.
Dzieza also urged adding more funding to sidewalk maintenance. "Show the public that the city is moving in the right direction while it works on the funding issues and recalibrates its thinking about what transportation mobility means."
He added that the neighborhoods are ready to work with the city on achieving the shared goal of making sidewalks accessible.
Jim Lazar informed the public of the city's long-term financial strategy, which has a clear policy of prioritizing maintaining existing infrastructure and assets.
Before incorporating new programs or staffing requests, he suggested that the council focus on fully funding maintenance needs, including parks, sidewalks, buildings, and city vehicles.
Lazar also suggested looking at the city manager's budget, which he claimed increased faster than any other budget over the ten years. "All the new programs have been built in there."
He also asked the council to consider eliminating the Economic Development program. "That is simply not a city function."
The community member also criticized the large growth in Public Relations staffing from one person to seven. He proposed eliminating most of those positions.
Lazar suggested shifting all housing programs to the Thurston County Housing Authority to have one centralized agency managing housing issues professionally with adequate staffing.
Regarding Lazar's suggestion, Councilmember Jim Cooper said he does not think the Housing Authority "would be a willing acceptor of the [city's] housing and homeless programs."
"Our community has demanded that we step up to the plate in a significant way," said Cooper, a board member of the Thurston Housing Authority. "While we've grown programming in our city, we have greatly improved regional partnerships and how we build and provide housing and homeless services around the region through those partnerships."
Councilmember Lisa Parshley defended the city manager's budget, which she said comes from the council's goal money. "When we asked for big policy changes, he stepped up and gave it to us. That's where a lot of his extra budget comes from, that is us, not the city manager. I just want to clarify that Jay is acting on our policies."
Parshley also commented on Lazar's suggestion of reducing PR or communications staffing levels; the city now has seven. She said the increased staffing has allowed for better communication of the city's work on issues like homelessness, housing, public safety, and climate – areas where transparency and information sharing have been demanded. "Without those extra people, one person cannot communicate well enough, and the transparency would go down."
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BobJacobs
Great comments from Larry Dzieza and Jim Lazar.
I'll add that we need a budget advisory committee. We have advisory committees for everything else, it seems, but not the city's most fundamental annual financial/policy document. This idea has been suggested for many years, decades actually, but has always been rejected.
Bob Jacobs
Friday, October 20, 2023 Report this
JW
Chickens coming home to roost for all the pet projects and BS the city has been spending like drunken sailors on. Focus on core services and cut the rest of the waste.
Sunday, October 22, 2023 Report this
Yeti1981
Economic Development is absolutely a city function. Not the city alone, but it is in fact a function of local government to provide a path for economic development. Perhaps, this is the mentality that has fueled the anti-growth sentiment among some?
Monday, October 23, 2023 Report this