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City of Kirkland prepares for loss of annexation tax credit in 2021, possible budget gap
The city of Kirkland is working to find ways to generate new revenue as it faces the loss of nearly $4 million in annual annexation sales tax credits starting in 2021. Two of those possibilities are potential redevelopment of the Totem Lake Malls and Parkplace.
If neither occur by 2021, the city will either need to find additional revenue elsewhere or make budget cuts, according to Finance Director Tracey Dunlap.
Last year, the city brought in $16.6 million in sales tax revenue, compared to $16.5 million in 2007, albeit the 2013 figure reflects the 2011 annexation of Finn Hill, North Juanita, and Kingsgate, which nearly doubled the city's population from 48,000 to 80,000.
City officials predict sales tax growth of four percent per year between 2015-2022 in the May 22 City Council packet, though officials also expresses concerns about the future economy's stability due to stagnation in various sectors.
"While overall revenue trends are positive," the document states, "the continuing volatile global economic conditions and slow growth in the labor market remain a concern."
Right now the city receives about $3.4 million in annexation sales tax credit. The tax credit is forecasted to grow at four percent a year between 2015-2021.
City Manager Kurt Triplett said that while the city hopes redevelopment occurs in Totem Lake Malls and Parkplace, they are making adjustments in the budget in the event it doesn't happen. Legally, the city is required to have a balanced budget, which is made every two years. While curbing increases in staff salaries and benefits, city staff is also putting money into the city's reserves. The reserves were used to help balance the budget during the last several years. City officials hope to have the reserves filled by 2018, which can be used to help fill the budget gap if revenue does not increase.
Triplett said that for the two redevelopments to occur by 2021 would be a "game changer" for the city's budgeting.
"If both of those happen, then Kirkland will be in a great position," he said. "And so right now we've been struggling through the recession they've sort of been in limbo. Our top priority is to get both of those projects moving."
Both Triplett and Dunlap stated despite these challenges, financially speaking the city is in a strong position and currently maintains a AAA credit rating by Standard and Poor.
At the moment, Triplett said that the city has been in contact with Coventry Real Estate Advisors, which owns the Totem Lake Malls, but nothing specific has been given as to any potential redevelopment. Repeated phone calls to Coventry Real Estate Advisors were not returned, and Kirkland Parkplace declined to comment for the story.