Depending on who you listen to, you may be under the impression that the city is managing its finances well because we are staying within our budget, revenue sources are at or exceeding budget expectations, and we have a plan in place to eliminate the budget “gap” within the next couple of years.
But it’s not quite that easy, and the path we’re currently on will cost you money and decrease services.
There are basically two areas of the city’s 2012 budget that have deficit spending: the general fund and the REET1 (Real Estate Excise Tax) fund.
While the city uses the term “gap” instead of deficit spending they are both the same and are where the operating expenses in the fund exceed the operating revenue into that fund.
In the 2012 budget, the general fund revenues are expected to be $12,445,766 and the expenditures $12,793,590 for a deficit of $347,824.
The deficit in the REET1 fund isn’t quite as straightforward. Those who thought the community center debate would be over once the decision to build it was made are likely disappointed and will be for the next 20 years.
That’s because the largest expenditure in the city’s history was financed at 100 percent with most of the payments coming from the REET1 fund, which is also used for other capital public safety projects, including sidewalks, streets and parkland acquisition (like Japanese Gulch).
Unfortunately, the 2012 projected revenue into the REET1 fund is $417,000, while the payments (debt service) for the community center alone are $905,650 for a deficit of $488,650.
Add to that an additional $425,745 in REET1 spending (this represents over a 10 fold increase from 2011 which was $40,200), and now the 2012 deficit in the REET1 fund is a whopping $914,395.
Combined, these two funds are spending $1,262,219 more than the city is taking in. The obvious question you’re probably asking is where does the extra money come from?
It comes from the beginning fund balance, which is currently $4,468,000 for the general fund and $4,582,770 for the REET1 fund. These amounts are used to “balance” the budget.
The city has a long range financial plan developed by a committee and adopted by the council that is intended to get the spending problem under control. Unfortunately, what many believe is adhering to the long range financial plan is in reality preventing the responsible daily management of the city’s finances.
This became disturbingly obvious to me when the council not only dismissed a recently proposed council balanced budget resolution but actually voted against even putting it on a future agenda for discussion.
Whenever a long range plan is used as an excuse for irresponsible short term management, you have a problem. We have a problem.
We have a full time mayor, city administrator and finance director. It’s their job to bring a balanced budget before the council.
There’s absolutely nothing wrong with requiring the mayor and his staff to show the council what an actual balanced budget would look like if they had to balance it today. It’s then up to the council to decide if the pain associated with a balanced budget is too great.
Unlike many cities, Mukilteo’s council or even finance committee isn’t included in the actual budget planning process. The mayor and his staff decide what budget proposals and requests come before the council and which don’t.
As a result, during the budget hearings each year, the council gets caught up in debating minor items that really amount to little more than “rubber stamping” the mayor’s proposed budget.
Recently we have had an IT (Information Technology) disaster and have lost critical city records including financial data and internal and public records.
The problem is the result of an accumulation of poor management decisions by the mayor and his management team.
Not only were suggestions from the IT manager not addressed or followed up on, IT requests were blocked from coming before the council. I’m very critical of this situation because I’m in the IT business.
Now staff members are being instructed not to talk to councilmembers (or maybe it’s just me), which makes me even more critical. The reality is, the leadership is covering their backsides because “heads would roll” if this happened in the real world.
Speaking of which, when the Mukilteo accounting services manager allegedly made that comment (as stated in the letter of reprimand she received), she was called into her supervisor’s office and chose to quit rather continue to work under these adverse conditions.
That’s a big loss for the city, considering she was heading up the effort to rebuild the city’s financial data from the last backup of Dec. 15 in preparation for the state auditor’s 2011 audit.
The city is on the verge of losing other employees as a result of how IT has been managed and the inevitable fallout. The irony is that outside of the Mukilteo bubble, heads would roll, and they’d be the heads of those who kept critical information from the board (i.e. council).
This is all going to cost us money, and I’m sorry to say, you get to pay for it.
To discuss this or any other city issue you’re interested in, please join Councilmember Schmalz and myself next Thursday, May 17, between 7:30-8:30 p.m. in the Rosehill room at the community center.
The preceding feature is published the second Wednesday of each month for The Beacon and is the opinion of Kevin Stoltz and may or may not represent the views of the Mukilteo City Council.
Posted on May 17, 2012 at 8:44 am Shawna Brenneke