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2017 - 2018 Budget Presentation

BUDGET MESSAGE
Denis Law
October 3, 2016


I appreciate the opportunity to present to you our proposed biennial budget for 2017-2018. This evening I will provide you with a summary of what we are proposing for the next two years. Our finance administrator, Jan Hawn, will follow with an overview of the budget, including updated revenue estimates for 2017-2018, and an update on our long-range financial projections.

Over the next couple weeks, specific budget proposals for each division will be presented to you by each of the department administrators. This will be an opportunity for you to ask any questions you may have or to discuss any recommended changes.

First, I want to thank Jan Hawn and her staff for all the work they put into preparing this budget proposal. I also want to thank department administrators and their respective staff members who worked on this budget.

The financial health of our city remains strong. We continue to improve the level of service we’re providing to our residents and business community, and we are experiencing significant investment in our city as the region continues to rebound from the great recession.

Sales tax, which represents a large sector of income that supports city operations, has continued to grow, but a lot of this is associated with new development and is one-time money that won’t sustain growing expenses. That, coupled with the 1% limitation on property tax, continues to create a challenge for cities and counties to keep up with service levels.

We’re hearing predictions of significant budget shortfalls in Seattle, King County, Snohomish County and other surrounding cities. Seattle has instituted nine voter-approved property tax increases over the past five years to pay for fire stations, parks, roads and other basic services.

While we’re not proposing cuts in services in this budget, we will be facing financial challenges in future years. Cost increases in labor and healthcare, and the loss of the sales-tax credit in 2019 from the Cascade/Benson annexation will need to be addressed.

We have remained financially strong by managing our growth at a level we can afford, particularly in staffing. In the last budget cycle, we did have to impose a Business and Occupation tax to help offset increases in operational costs. Most surrounding jurisdictions have had this tax in place for many years.

Before launching into the specifics of this budget proposal, I would like to recap some highlights of the past two years.

In addressing the goals and objectives of the Council’s Business Plan, we established some specific tasks to ensure that we were making measurable progress in priority areas that you have supported. We developed specific goals associated with our five priority areas:

  1. Economic Development
  2. Inclusion/Diversity Initiative
  3. Police Effectiveness/Community Relations
  4. Workforce Culture, Competence, Customer Service
  5. Quality of Life Initiative

We have experienced a lot of success in our economic development efforts. We currently have over $2.2 billion dollars of private investment being made in Renton. This includes three new hotels, several office complexes, downtown development and major expansions such as IKEA and Valley Medical Center.

This economic boom has resulted in hundreds of new jobs for Renton. And we’re seeing significant growth in the healthcare sector. Group Health is building a half million square feet of offices in the valley, and Providence Health Systems continues to expand. Valley Medical Center is planning a major expansion on its campus starting next year with a $38 million, multi-story parking garage to serve a new medical office building. And Boeing continues to increase its production levels.

We’re really excited about the new investments being made in our downtown and the Sunset Improvement Area. It’s pretty impressive when you look at the full list of projects under way in Renton.

All of this growth equates into a lot more work at City Hall. Our planning staff has processed over 13,000 permits over the past two years. Our inspectors are averaging over 400 inspections each week. And our population has grown to 101,340 people.

Our staff has absorbed much of this growth with only a few positions refilled over the past couple years. The workload is now at a point where our service levels are being impacted. This budget proposal adds some positions to meet the current level of demand that has remained consistent now for a couple years.

Public Works employees are often the unsung heroes of any city. The work they do is crucial but often goes unnoticed.

Our public works employees have been working tirelessly to rehabilitate miles of sewer lines, replace water mains, and complete the conversion of over 18,000 City water meters to an advanced metering system with leak detection capabilities. This metering system has saved our property owners thousands of dollars by early detection of water leaks.

We have completed several key transportation projects and street improvements including construction of Logan Avenue North, Duvall Avenue Overlay, SW 27th Street and Strander Boulevard Extension, and several projects at the airport. We just completed dredging the Cedar River, removing 120,000 cubic yards of gravel and sediments from a 1.25-mile stretch of the river.

As you know, we continue to make great progress in meeting our goals of being an inclusive community with opportunities for all. I’m so pleased with the efforts of our Inclusion Task Force, which has played a huge role in helping us improve communications, services and programs that we provide to our diverse community. Internal training to address implicit bias and institutional racism continues for all employees. Ongoing programs by police, in partnership with our African American Pastoral Group, continue to build positive relationships between law enforcement and our community. Our first Multicultural Festival this past weekend was a huge success.

In preparation for this budget process, I convened the Mayor’s Budget Advisory Group again to meet with each department to review our services, our successes and our challenges, and to provide guidance on priorities for the city as we move forward.

This group was comprised of local residents, business owners, and community leaders. They met over a period of several weeks with every department head and our finance department. This budget reflects several key priorities and suggestions for cost savings that were recommended by the advisory group. I’d like to thank them for their invaluable input that has helped shape this current budget.

Public Safety continues to be one of our highest priorities. We have developed a culture within our police department that is committed to finding creative ways to reduce crime, while also making it a priority to improve the sense of safety throughout our city. We have made great progress, but there is a lot more to do.

The largest increase in this budget proposal is in added police positions, to help us meet and sustain the goals we have in creating a safe community. Our police leadership team will present these proposals to you in detail in upcoming budget meetings.

In the priority area of workforce culture and customer service, we have made tremendous progress. Day after day, we receive feedback from our residents for the quality interaction they have had with city employees. We continue to emphasize the importance of improving our management techniques and training to increase productivity, reduce costs and focus on job satisfaction for our dedicated employees.

Improving and nurturing a quality of life in our community drives everything we do. Departments work together to find solutions to ongoing issues, from code enforcement to impacts from homelessness. Our employees are committed to providing quality service to our customers – the tax payers of this city.

Maintaining a focus on efficiency and innovation has allowed us to provide levels of service that our residents deserve, while also operating within our financial means.

The balanced budget I’m presenting to you this evening for 2017 and 2018, has expenditures of $476 million. $196 million of this amount is the General Government fund used for police, parks, street repair, and other city services.

This is a decrease of 5.3% in overall revenue and a 2.0% decrease in expenditures compared with the 2015-16 adopted budget.

The primary reason for the decrease in both revenues and expenditures is due to the formation of the Regional Fire Authority (RFA), which voters approved in April. Revenues will decrease in 2017 due to the fact that the City of Renton will lower its property tax rate by $1.00 per $1,000 assessed value in 2017, resulting in a reduction of $12.5 million in tax and an additional reduction of $5.5 million in 2018. Together, these two changes result in an approximate $18 million lower property tax levy. In addition, $5.8 million in revenue previously collected by the City for fire service contracts will be paid to the RFA.

It’s important to note that while residents and businesses will experience a reduction in property tax that goes to the city, they are not going to be paying less each year. The property tax will still be collected by the Regional Fire Authority, which became an independent taxing authority.

The proposed 2017-18 budget does not contain any citywide cuts. The focus of the proposed budget is to stabilize and maintain core City services at a level that is expected by our residents and businesses, and will position Renton for the future.

I mentioned briefly about our priority in public safety. This budget recommends adding two detectives to the Investigations Division to enable us to pursue and prosecute individuals involved in many misdemeanor crimes, the types of crimes that play a big role in creating a feeling of vulnerability throughout the community. We know that a small number of thieves are responsible for a tremendous amount of the crime that occurs, and we want to get them off our streets.

We are also requesting several positions in administrative services and our police specialist area to help us stay on top of our recruitment and hiring needs, as well as the increased workload of processing reports that will assist with the identification and prosecution process. We’re also requesting another accident investigator to assist the only investigator we have to address a growing number of vehicle-related criminal cases, from hit-and-run accidents to vehicular assaults and homicides.

We have applied for a COPS grant from the Department of Justice, which would offset the cost of the five commissioned positions.

I want to mention just a few of the budget highlights:

  • We have added funding to our Inclusion Program for the dedicated services of an expert consultant, who will assist with the continued emphasis and success of our program. For the past couple years, we have funded the services we receive from Benita Horn from salary savings we had in the executive budget. Benita’s efforts have been invaluable to this organization in helping us achieve the formidable goals we have in addressing inclusion and diversity. This budget item formalizes the commitment to continue with these efforts.
  • Despite the improved economy, we continue to experience a growing number of people who are struggling to survive. Homelessness is at an epidemic level and the need for help is well beyond the existing resources that are pledged. In addition to funding requests from the Human Services Advisory Committee, I’m proposing that we add an additional $24,000 per year to fund several proven programs that the Committee was unable to include within the budget constraint.
  • To address the significant growth in development projects that I mentioned earlier, this budget proposal includes adding an administrative secretary, a plan reviewer and a construction inspector to Community and Economic Development.
  • It won’t surprise you that more and more of our customers are using bank cards to pay for city fees and services. This budget reflects a expense item of $254,000 per year to cover the actual costs from bank fees and merchant services. We plan to recoup these costs with minor fee adjustments.
  • This budget plans for some of our critical maintenance and capital projects. Renton has been very fortunate over the past several years in obtaining state grants for major roadway improvement projects. And we have been able to meet the required financial match from our transportation budget. Some areas of improvement include the Rainier Avenue North corridor; Main Ave S. reconstruction and conversion to two-way traffic; improvements to Duvall Ave NE from NE 4th St to Sunset Blvd NE; and Park Ave N Extension; as well as some other Public Works projects.

As you know, Renton’s parks and trail system continue to receive praise from our residents and visitors from around the region. We have great natural resources, amazing parks and trails, year-round events, and a vibrant Farmers Market. Our recreation programs are among the best in the region and offer a diverse range of activities.

  • The recreation class registration management system we currently use will not be available after next year. Since this is a core service provided by our Recreation Division, the budget includes staff resources for the implementation and ongoing support for a new system.
  • Arts and culture contribute to the development of creative learning and build healthy and beautiful communities. This budget includes $50,000 in 2017 for the arts, as well as a commitment for funding from city-capital improvement projects. In the future, we hope to work with our community on a “quality-of-life” initiative and make additional investments in arts and culture in our community.
  • The budget also includes staffing and resources for maintenance and improvement for several of our parks and facilities. Some examples include repairs and maintenance at Gene Coulon Park, expansion of Ron Regis Park athletic fields, improvements at the Senior Center, downtown way-finding, transportation landscape improvements and a Piazza Park Master Plan and possible redevelopment.

In closing, I’m pleased to report that our city remains financially healthy. The quality of service to our residents continues to improve, which is confirmed by the positive feedback we receive from our community nearly every day.

Like every large city, we have plenty of challenges before us. We also have great opportunities.

Our department administrators and employees are embracing the goal of being the best city in King County. We are committed to make it safer, more inclusive to meet our diverse population, and more aware and sensitive to the needs of our vulnerable population.
Growth is inevitable. However, we have the opportunity to direct this growth in a way that builds and nurtures a quality community for generations to come.

We turned 115 years old this past July, and the city has never been better than it is today.

 Thank you.