As the summer comes to a close, an even more important season is on the horizon for the Bonney Lake City Council: budget season.
The council hosted its first budget meeting of the year last week at the new Reed Well Property to get a sense of where the city stands and get a look at budget predictions for the coming year.
And after a year of cuts and savings, the city is still in decent shape, but according to all models, expenditures are expected to once again outpace revenues in both years of the next biennium.
Because of that, Mayor Neil Johnson told the council he planned to submit a budget that covers part of the expected $707,000 gap next year by pulling from the city’s fund balance, which is expected to finish the year at more than $4.5 million.
The question for the council to consider is how much of the fund balance they are willing to spend, though Johnson was clear he only expects to have to dip into the city’s savings for a few more years.
“My goal is to present a budget to the council that uses less of the ending fund balance year over year,” Johnson told the council.
Johnson said previous councils made the right decision by beginning to save excess revenues in 2002, when the city was collecting much higher revenues through building permits and property taxes.
“Thankfully, those years have paid off,” he said, but added that the city’s fund balance can’t be abused.
Johnson, who said he wanted to have the budget meeting before he presented the council with a first draft of the mayor’s budget, said his inclination was to use the fund balance to make ends meet because the city has always run “lean and mean” and he does not necessarily want to cut any positions or services.
Finance Director Al Juarez provided the council with an overview of the city’s finances and a look into what he described as “the new normal” in which revenues are expected to rise again.
Looking toward the next biennium, Juarez said Bonney Lake is in better shape than many of its neighbors, but will still need to watch its bottom line.
City Administrator Don Morrison told the council that department heads have already cut the “cushion” out of their budgets and are functioning at “bare bones” levels, but a 12 percent increase in health insurance costs for employees would still lead to a budget gap of more than $700,000 next year and a projected gap of slightly less the following year.
Johnson agreed, adding that he expects the economy in 2001 to “go backwards and that’s what we need to plan for.”
The administration also presented the council with several options for closing the gap, including suggestions to generate new revenue as well as reduction options.
The council was unanimous in not wanting to raise taxes during a difficult economic time, especially with a large fund balance on the books.
Deputy Mayor Dan Swatman called it “totally unreasonable” to expect the council to close the budget gap through cuts alone and expressed his belief the fund balance should be used as much as necessary, a feeling seemingly shared by the rest of the council.
Councilmembers were also asked about whether the budget should factor in the potential annexation of several areas south of city limits.
Though no hard number was given for a comfort level of how much of the city’s fund balance could be used in budgeting purposes, the consensus among the council was to use the fund to prevent the city from having to make many more cuts. The council also seemed to acknowledge moving forward with an annexation-free budget, opting instead to make any necessary changes during a mid-biennium adjustment, should the annexation pass.
The measure is expected to be on the February ballot.
Juarez said the next step was a series of budget worksheets that will be passed out to department heads this week as a “preliminary step” toward the mayor’s proposed budget, though all indications are for a “hold the line” budget again this year.
