Shoreline is a young city, having just celebrated its 15th anniversary in 2010, and its residents have a lot to celebrate! From the redevelopment of the Aurora Corridor to completion of the Parks Bond projects, from enhanced stormwater management systems to improved public safety, the City has transformed from an often neglected part of King County into a vibrant City that 93% of residents rate as an excellent or good place to live.
The transformation has occurred due to the hard work of Shoreline residents and the prudent financial stewardship of past City Councils. However, even with conservative financial planning and spending policies, the City realized that it would face significant structural budget gaps starting in 2011, jeopardizing many of the investments made in Shoreline’s neighborhoods and community.
The simple reason for the budget gaps was that inflationary costs for fuel, asphalt, public safety, health benefits and other items grow faster than the City’s most important revenue sources. Property tax represents the single largest source of revenue for the City’s general fund, but it is limited to a 1% increase per year unless voters approve a higher levy rate. Inflation, on the other hand, has no limit. From 2000 to 2010, inflation increased by 27%, while at the same time, the City’s property tax levy, excluding new construction, had grown by less than 10%. The table below shows some of the cost changes that the City has experienced in the last decade:
||Change Since 2000
|Health Benefit Cost per Employee
|Cost per Therm of Natural Gas
|Cost of Gallon of Gasoline
|Cost per Ton of Hot Mix Asphalt
The graph below is another way of looking at the property tax rate compared to inflation over the past ten years. It clearly shows how the property tax rate has remand stagnant while inflation has grown.
During that same period there were additional mandates and voter-approved measures placed on the City that either increased costs without a direct funding source or reduced the resources available to provide critical services.
While we have been able to balance budgets over the past several years through service efficiencies, spending cuts, and revenue enhancements, we could not continue to fund ongoing operations that way and put off long-term maintenance and replacement. Our declining revenues could not continue to support the services that make Shoreline a great community in which to live, work, and play. Below is a graph that showed the projected annual budget gap over the next six years if Proposition 1 had not passed:
If the revenue projections did not improve and Proposition 1 had not passed, the City Council would have had to make some tough decisions about what services to cut and by how much. The Council would have looked to Shoreline residents for guidance in what services they deemed to be high priorities and which they did not.
A starting point for discussions came in 2005 when the City met with community leaders and a random sampling of citizens to discuss community priorities. Each participant was given a list of 40 city services and asked to prioritize them into four priority buckets from most important to least important. The participants were also told that they could only put ten items in each bucket. A fifth bucket contained items the City had to provide.
The results of the exercise showed that the City would not be able to make up its deficit by just concentrating on the lowest priority items. In order to close the increasing budget gap, cuts would also need to be made in services found in the third priority category and possibly the second. The results of the exercise are below:
|#1 = $12.9m
||#2 = $5.5m
||#3 = $2.8m
||#4 = $0.4m
||Have to = $4.7m
|Police – Patrol, Investigation, Traffic Enforcement
||24 Hr. Customer Response Team
||School Resource Officer
||Jail & Court Services
|Street Operations & Maintenance
||Park & Facility Maintenance
||City-Wide Equipment & Supplies
||City Hall Mortgage
(Similar priorities have been grouped together.)
The dollar amounts assigned to the different buckets reflect the 2010 budget less any dedicated revenue for the services listed. For example, fees generated from the pool or recreation programs have been netted against the cost. Department support costs (i.e., Finance and Information Services, Human Resources, City Manager, City Clerk, City Attorney, City Council) have been allocated to each priority bucket.
Levy Lid Lift
In 2008, the City Council appointed an 18-member citizen advisory committee to develop recommendations on how to address the City’s long-term financial challenges. Among their recommendations, which included continued focus on efficiencies, was for the City Council to consider putting a property tax levy increase on the ballot in 2010. This has become a routine action for School, Fire, and Library Districts. It is becoming a necessity for cities.
To address the anticipated budget gaps, the City Council placed Proposition 1, a maintenance and operations levy, on the November 2010 ballot. State law limits the City’s levy rate to $1.60 per $1,000 assessed valuation. The City’s projected levy rate for 2011 before Proposition 1 was $1.10 per $1,000 of assessed value. For the average Shoreline homeowner with an assessed home value of approximately $360,000 in 2011, Proposition 1's $0.28 increase results in an average annual property tax increase of about $91 over a six year period. That’s a monthly increase of approximately $7.58.