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2010 Budget Presentation

To the Honorable members of the Renton City Council:

I appreciate this opportunity to present to you our balanced budget proposal for 2010.

I believe this budget represents a turning point in the fiscal management of our city for years to come.

You are well aware that we are in the middle of an economic recession of a scale not seen since the Great Depression. Foreclosures, and all the factors related to them, continue to affect our neighborhoods. The state and King County continue to report huge deficits leaving cities to deal with the fallout of their cuts in service. People and businesses are struggling, and many of the things that improve the quality of life for our residents are in jeopardy.

But this is also an opportunity for us to examine ourselves carefully and we have begun the process of reinventing ourselves as a provider of city services.
For a number of years, local government has been headed for a financial crisis brought on by a structural flaw in our source of funding. Property tax growth, which used to be our main revenue source, is capped by state law at 1% growth per year, and yet the cost of doing business in normal economic times increases annually at a rate closer to 4%. For a number of years, this city and most of the others in this state have been living on revenue from a booming economy and extensive commercial and residential development. Sales tax revenues and other one-time money has allowed us to keep up with the rising cost of providing public safety, parks, roads, and other services.

It’s predicted that it will be many years before we experience the level of economic growth of the past decade.

This strategy — reliance on growth and economic development as a way to balance the city’s budget — has been significantly impacted by the national recession, leaving an large gap needed to pay for the level of city services our citizens have come to expect.

A complex system of taxation leaves the public with a false assumption that they are already paying the bulk of the cost for these city services. However, of the total amount paid for property tax, less than 25% goes to support all of the city services received by our citizens. The remainder goes to the county, local and state schools, the Port of Seattle, Medic 1, King County Ferry District and King County Flood District.

The amount of property tax that an average home owner in Renton pays to the city is about $850 per year. So for an average of $70 a month for a typical residential family, our citizens receive fire and emergency medical services, police protection, street maintenance, and wonderful parks and trails.

I point this out to you, not to suggest that this is not a lot of money for many of our residents on small and fixed incomes, but to emphasize that our property tax system, which groups all of the taxing districts into one statement, makes it difficult for citizens to actually see how much local service they receive, from the city portion of their annual property taxes.

A history of wasteful government spending has created a high level of mistrust with taxpayers on how their dollars are being spent. Every level of government, from the White House to City Hall, tends to be painted with the same brush. In Renton, our employees work hard to improve our efficiencies and focus on providing quality service to our citizens. There’s more we can do. But we can no longer depend on one-time resources to pay for the bulk of these services.
In collaboration with our citizens, we must determine our priorities and continue to look for more efficient ways to do business. Failing to tackle this challenge will erode the quality of life in our city.

For you and me, and our 83,000 residents, that outcome is unacceptable.

We’ve already made significant cuts during the past 18 months to balance our budgets. We have eliminated almost all travel and training, curtailed or postponed purchases of equipment, and delayed needed maintenance.  But these were quick-fix solutions and are not sustainable. 

This budget goes well beyond the hiring freeze and spending cuts that were implemented last year to meet the drop in revenues.

Today’s proposed budget is balanced, maintaining core responsibilities, and 3.5% lower than last year’s adopted budget. This budget reduces our workforce by 12%.

We will not raise taxes next year.  Renton is probably one of the only jurisdictions in our region that will not exercise the authority we have to raise the property tax.  This is not a time to impact our citizens with tax increases to fill our revenue shortfall. 

Like a household budget, we need to reduce our spending. We will make critical choices about how to spend tax dollars we have to keep our city’s finances strong.

Making decisions on what to cut is not easy.  Although our 2010 budget will be smaller than last year's, we will take no shortcuts in our commitment to protect critical city services.

To achieve the cuts in this budget, we made some significant changes in our processes.

We started earlier. We set clear objectives. We embarked on the path to reinvent ourselves as an organization and clearly define our priorities.

We sought the ideas and recommendations of staff from every department to determine the programs and services that we will be able to offer our citizens next year. And, this year’s budget takes the lead on multiple fronts to improve how we will do business in the future.

First, we continue to find innovative, creative and cost effective approaches to service delivery, whether it’s fighting crime, preventing fires, disposing of solid waste, or building a park.

Our recent partnership with local residents to fund an off-leash dog park near the Renton Community Center is a great example of a creative solution that responds to a community need, even though we had very limited financial means. We collaborated with members of the community, who were able to raise the needed funds and volunteer labor from local residents and businesses.

Second, we continue our efforts to diversify how we utilize the city’s revenues and seek other sources of funding such as grants.

Our photo enforcement program is an example where we have been able to make our streets safer while dedicating any excess revenues generated from this program to providing additional police services. This past summer, we used these revenues to help pay for additional police presence and security in our neighborhoods and parks and the Transit Center, something our citizens have been requesting for years.

We continue to do all we can to access new grant resources and to use acquired funds to improve our city’s sustainability. This year we expect to receive a total of nearly $5 million in grant funding for various important projects: almost $2 million for the construction and improvements to Rainier and Shattuck Avenues, over $1.5 million for police officers, and over $600,000 for energy efficiency and conservation projects.

Third, we took a non-traditional approach to our budget process. Using zero-based budgeting, we focused on establishing core city services that are valued by our citizens, or are mandated, identifying key indicators to evaluate how effectively we are delivering these services, and making choices on how we invest for the future.

Rather than building on a previous year’s budget, each city department’s budget started at zero. Programs and activities were reviewed and ranked according to how they meet the community’s priorities. 

While our citizens have come to expect and enjoy many services that they receive from the city, some are not vital or mandatory. We have to prioritize between what is essential and what is desirable. I feel this budget is a prudent blueprint to meet difficult economic circumstances and lay a foundation for a responsible future.

Before I share our key priorities, and some of the impacts of the hard decisions we are recommending to you, I’d like to give you a financial summary of the 2010 budget.

The city’s budget is very much like a typical family’s budget. Just as residents earn income, so does the city. Just as they spend money for essential items and services, so does the city.  Both have to live within their means and it’s a constant balancing act.

The 2010 budget totals $212 million. Of that total, $98 million for the General Fund, which is less than half of our total budget, is available for the bulk of our city services, with the remainder dedicated to capital budgets and other operating funds.

The city’s General Fund provides funding for basic services and is mostly funded by taxes, including property tax, sales tax and utility taxes. Fees for some services like building permits also contribute to the General Fund.

The majority of the expenditures in the General Fund  — 52% —  are dedicated to public safety — which includes police, courts, fire and emergency services. Other services including maintenance on infrastructure, parks, recreation, community services, planning, and economic development — account for 30%, while internal support services make up the remainder. All of these services are provided by city employees, which is why the city’s largest expense — nearly 66% — is devoted to wages and benefits.

With the continued decline in the local economy, our preliminary projections indicated that maintaining current services would result in a gap of about $6 million between revenues and expenditures next year. This shortfall represents more than 6% of the General Fund Budget.
In order to make up this budget gap, we must reduce our workforce. We are projecting that we will have to have to lay-off 35 employees and not fill 16 positions that are currently vacant.

When you add these to the 35 positions that we left unfilled last year, we have lost 12% of our workforce and will be operating with 86 fewer people. In addition we are reducing our seasonal and part-time staff by approximately 80 positions. This will have a direct impact on services.

PRIORITIES

Clearly one of our key priorities is public safety and protecting our citizens. But we are also looking at all the services we provide as a city.
To identify our priorities, department administrators and staff from every department helped examine our service priorities and identify the key programs and services expected by our taxpayers. Within each broad core service area, service expectations and programs and priorities were established and ranked. 
Here are the key priorities and service expectations for each:

Safe and Healthy Community:   Our citizens want Renton to be a safe and healthy community. 

For example, one of our priority programs is the Special Operations Division of the Renton Police Department that proactively identifies and targets prolific offenders. As a result, we are much more effective at reducing crime.

Livable Community:   Our citizens want high quality facilities, services and public resources to make Renton a place where people choose to live, learn, work and play.

Renton prides itself on its strong relationship with its neighborhoods, its beautiful parks, and its robust pursuit of economic development opportunities. These remain our priorities and we will continue to look for ways to improve the quality of life in the community.

Representative Government:   Our community expects Renton to be a responsible and responsive government.

Our key priority is to provide our citizens access to city government — from the elected and appointed officials who represent the community as they determine policy decisions that affect the future of our city, to our municipal court that offers a fair opportunity for our citizens to be heard.

Mobility:   To assure our citizens have safe and efficient access to all desired destinations, now and in the future.

We will provide a network of streets, sidewalks, trails, and roads that are well maintained, connect to public and major facilities and make it easy for our community to have access.

Utilities and Environment:    Our community wants a clean, green, and protected environment with reliable, affordable utility service.

From reliable and safe drinking water to recycling and garbage collection services to the stewardship of our environment — we will continue our commitment to these priorities, and preserve and protect our open spaces and natural systems to meet present and future needs.

Internal Support:   Specific city departments and services enable other city departments to operate efficiently and effectively in a safe and sustainable manner. 

Whether it is a qualified, well trained and productive workforce, or the financial and technological system that supports this workforce, these are systems that make it possible for city government to function. We will continue to focus on the best internal support systems so that we can deliver on our promise to provide high quality service to our citizens.

So as we carefully deliberated on the proposals of each department, division and program, we put them through the test to see how well they matched these priorities. If proposals were not mandated or were less critical than others, we made choices, and — as harsh as this may sound — they were potentially on the cutting block.

As I mentioned earlier, in order to bring our expenses more in line with our projected revenues for 2010, we have to lay off 35 employees — each one of them in important, highly valued positions. Here are some impacts that these cuts will have on our community:

  • In our police department, we carefully scrutinized all the proposed cuts to ensure that we did not compromise our response times and our ability to keep our community safe. Some of the proposed budget reductions for the police department include administrative and clerical staff, resulting in police officers assuming some of those administrative functions
  • In our Fire and Emergency Services Department, there will be no reductions that impact our ability to provide fast and quality service. In fact, we propose to restore another full-service aid car to improve our response time and our service to our citizens. We will continue to hold open positions that we did not fill last year, not fill an open deputy chief position, and in addition reduce two fire inspector positions. The community risk reduction function will be assumed by the Emergency Management Director, and there will be some reduction in service levels related to conducting inspections and investigations.
  • In the Community Services Department we are reducing our seasonal/part time staff by approximately 80, which equates to approximately seven full-time employees. These reductions will eliminate the Summer Teen Musical program and closure of the recreation buildings at Kennydale, Kiwanis, Philip Arnold, Teasdale and Tiffany Park. Free summer drop-in youth programs, volunteer recognition and holiday lights will also be compromised by total elimination or reductions.
  • Other impacts in the Community Services Department include staff reductions at the museum, reductions in geese control, tree removal, maintenance supplies, and the current flower program. Decreased custodial staffing will reduce frequency of cleaning public restrooms.
  • While Renton voters will have the opportunity to cast their vote and consider changing administration of library services in February, currently the city cannot afford the desired level of library services and programs. We will be forced to make reductions in staffing, materials, and other programs.
  • We are reducing staffing in the Department of Community and Economic Development by more than 20%. While we can still meet our planning mandates with less staff, our progress on community plans and the planning support provided to other city departments will be reduced. Reductions in current planning and development services staff will increase the wait time for pre-applications, permit reviews and inspections. While we are maintaining current staffing levels in Code Compliance, reductions in other supporting departments will result in delays in cleaning up our neighborhoods. We will look for ways to allow the Municipal Arts Commission and the Renton Farmers Market to be self-sustaining in the future. And, we will continue to build on the popularity of the Neighborhood Program to enlist the community’s support and assistance in our broader efforts.
  • In our Public Works Department we will reduce our transportation capital project management program, which will increase the timelines of our response to citizens’ requests regarding street, sidewalk, and traffic complaints. We will also reduce our work on updating the comprehensive walkway plan. There will be a decline in the maintenance of streets and utilities, and reduction of street-side litter collection.
  • We will provide minimum compliance with the Commute Trip Reduction program and eliminate our coordination with Sound Transit and King County METRO, reduce the contribution level of the Transportation Implementation Plan, reduce street maintenance support, and reduce administrative support. Many of these reductions will increase our response time to customers.
  • The Finance and Information Technology Department will eliminate project accounting and contract management, consolidate Financial Analysis and Debt Services with Financial Planning, reduce overall department clerical support and move to a biennial budget to reduce production, publication and staff costs. The reductions in the Information Technology division will result in reduced capacity to implement automation projects, deferred upgrades to the telephone and GIS systems, and additional contracted services.
  • Human Resources and Risk Management will eliminate technical staff and support in both the HR and Risk Management functions. These reductions will create longer turnaround times for recruitments and significantly limit our ability to provide training and professional development services.
  • The Executive Department, which includes the Mayor’s Office and the Communications Division, will reduce staff and capabilities for print and mail, leave the communications specialist position unfilled, and eliminate the part-time videographer/multi-media position. All dues for national memberships and associations will be eliminated or significantly reduced, and we will further reduce administrative support. With reduced staffing in the City Clerk’s office, it will take us longer to process requests for records. As a result of the reductions, the Courts probation officers will have to spend less time with parolees and more time on administrative functions.
  • Even the Council’s budget has cuts. The proposed budget will reduce the Council travel budget by nearly 60%.

UTILITY FUNDS

The water, wastewater, and surface water utility funds are accounted for and budgeted for separately, but are managed as a system in accordance with the city’s financial management policies.

We worked very hard to keep our rates as low as possible. A modest increase in utility rates will be required, but Renton’s utility rates will remain among the very lowest in the region. We will be presenting our proposed rates for 2010 to Council in early November.

In 2010, we expect to reduce our participation in water education projects and the purchase and distribution of water saving devices. In our solid waste fund, we will eliminate the Clean-Sweep curbside clean-up and instead focus on customer service.

CAPITAL FUNDING

As you know, capital projects use dedicated funds, coming largely from state and federal funding sources, that can’t be used for operations. 

We have very limited new resources for general capital projects in 2010. However, we have a few key projects that we are pleased to begin this year.

Of the $29 million in proposed capital projects, over $27 million is for transportation and utility projects, and about $2 million is for other projects.

One of our largest capital projects is the Rainier Avenue project, which will cost $8 million in 2010 and $12 million in 2011 and 2012, with a significant part of the funding obtained from state and federal funds.

Renton along with six south county cities is in the process of building a multi-jurisdictional misdemeanant jail. This collaboration will provide our community with significant savings in future jail costs.

We have several utility projects including water meter and water main replacements, the Highlands reservoir replacement, wastewater projects including the Earlington sewer replacement, and rehabilitation of our lift stations.

The Hardee underpass stormwater system and the new system at Hawks Landing are among some of the planned surface water capital improvement projects.

While our work at the Renton Municipal Airport in 2010 will not be as complicated as the runway repaving we did this year, we are planning to dredge the seaplane base.

Across the board, we have found many ways to reduce our costs while minimizing the impacts to our citizens. This budget makes some necessary and hard reductions, but preserves core services.

In tough times we are continuing to deliver results. We continue to invest in crime reduction, public safety, infrastructure, and quality of life programs. We are showing that smart investments can continue to make Renton a city of opportunity.

Crime rate as measured by crimes per thousand has decreased by double digits for the last three years. Currently our crime rate is one of the lowest in South King County. This wasn’t easy and it wasn’t an accident. We got to this place because we made public safety our top priority, and we gave our police officers the tools they need to be more effective.

This year we responded to several major fires. Two of these were five-alarm fires that occurred within a three-week period. Our response was tremendous — there were no injuries to our residents, or our firefighters, and adjoining properties were saved.

Earlier this year we celebrated the grand opening of Duvall Avenue, a project that saved the taxpayers $4 million and 15 months of construction time. As one of our major roadways, Duvall now has additional lanes, underground power lines and sidewalks.

Our Neighborhood Program received national honors this year at the Neighborhoods USA Conference, and was the only program in the country to be recognized in two categories.

We achieved tremendous success by providing our citizens with green and open spaces while making Renton a greener, healthier city. Our Maplewood Golf Course was recognized for environmental excellence by the Audubon Society. And thanks to our urban forestry plan and program, we received the Tree City USA recognition. We completed our bikes and trails plan and provided our community with pedestrian and bicycle-friendly options. And our solid waste and recycling programs reduced garbage by over 45 percent — the equivalent to diverting over 18,500 tons from our landfills every year.  Renton received “Recycler of the Year” award from the Washington State Recycling Association.

During these challenging times, we prioritized business retention and continue to work closely with Renton Technical College and the Chamber. The Renton Small Business Development Center, for which we received funds from the state, offers valuable resources and assistance to our businesses.
Every month we have new stores and restaurants opening at The Landing, and despite the economy they are doing well. We anticipate the opening of at least two more stores in time for holiday shopping. The Farmers Market enjoyed record attendance—over 4,000 people every week and 60 registered vendors.
The Seahawks Training Camp brought 3,000 fans daily and a total of 15,000 people to Renton during the summer. Our local economy got a great boost from these visitors who shopped and dined in Renton.

We had several significant ribbon cuttings for key employers who brought jobs to Renton — from Harley Davidson to Uwajimaya. We will soon celebrate the opening of Valley Medical Center’s emergency services tower — the culmination of a $200 million expansion with state-of-the-art emergency and trauma care, and disaster recovery services.

This next year we will be moving forward with the redevelopment of Quendall Terminals on Lake Washington. Construction of the Hawks Landing Hotel at the former Pan Abode site in Kennydale is scheduled for next spring. And, long-range planning efforts in the City Center and the Highlands will set the stage for new public and private investment.

Renton has a record of innovation, and we won’t stop just because of the economic downturn. We have to stay focused on opportunity — not in spite of the financial challenges we face, but because of them.

The message in this budget is simple, but loud and clear: In the greatest economic meltdown since the Great Depression, Renton continues to do great things.
I want to thank each of our administrators and all the employees who worked hard during these stressful times to find solutions to these budget challenges.
I also want to thank the Council for your guidance and input as we worked on this budget.

We will be presenting you with more specific details on this budget proposal during the next couple weeks and welcome your feedback, concerns, and recommendations.

Thank you.
Denis Law

October 2009