The Kirkland City Council was updated on the city’s financial state at its Nov. 6 study session through a mid-biennial budget review.
It is required by state law that a mid-biennial review is done between Sept. 1 and Dec. 31 during the first year of the biennium. The current biennium is from 2019-20.
David Goldman, deputy director of finance and administration for the city, provided a financial update, revenue and expenditure highlights, 2020 service packages and more during the meeting.
According to the presentation, this is the last biennium with the full annexation sales tax credit. The ending of this credit means there will be a $6 million revenue reduction in the 2021-22 biennium budget.
“Because of this, we talked to the directors and we told them to limit their service packages for consideration for the mid-biennium,” Goldman said.
However, Goldman said because projected revenues for 2020 are above budget, that will help address the upcoming gap. Currently, the city is on track to have an ending balance of about $16.51 million — slightly more than the target of $16.41 million.
Revenue and expenditure highlights
Revenue, in most categories, is above budget. Interest earnings, business license fees, development services, the real estate excise tax and the sales tax are all earning slightly more than anticipated. In some areas, 2018 saw more money accrued: for 2019, business license fees (which are projected to go 8.4 percent above budget) are down 7.9 percent compared to last year; the gas tax, which is 4.5 percent under budget through, is 3.4 percent lower than 2018; and development services are 23.5 percent lower this year.
Goldman said of the latter drop, building permits pulled for up-and-coming businesses at the Village at Totem Lake and Kirkland Urban are in part responsible for this.
Overall, the city’s expenditure amount is expected to be right at or a little below budget by the end of the year. Some items contributing to the current expenditure amount are salary and benefits (which are at the moment $413,000 under budget mostly due to vacancies), fire suppression overtime and contract jail costs.
Potential GEMT program uses
The city is seeing some financial benefits as a result of its participation in the Washington Ground Emergency Transport (GEMT) program. Passed in 2015 by the state legislature, the program, according to the presentation, makes supplemental payments to eligible agencies who provide emergency ambulance services to Medicaid recipients. As a result of Kirkland’s participation in the program, about $3.6 million is expected to be garnered over the course of two years. It was noted at the meeting that the future of the program is unclear, which means that, if the additional money from the program is spent, it needs to be spent on one-time needs.
“The reason we say the future is unclear is that I think what all local jurisdictions are experiencing is more money than we thought we would get, which means we think the state is paying more money than they thought they would pay,” city manager Kurt Triplett said.
Several uses for this extra revenue are being considered: buying out the current leaseholders of the Fire Station 27 property, building a retaining wall and/or new personnel at Fire Station 24, firefighter overtime pay for 2019 or public safety radio replacements.
2020 service package recommendations
Triplett is making seven service package recommendations. The packages, according to the agenda meeting item, have been identified to both complement council direction and what’s needed to best support the Kirkland work plan for the current biennium. According to Goldman, these are one-time investments that seek to either improve city efficiency in certain areas or attend to work backlogs. Six out of the seven packages would be funded with offset expenditure reductions or new revenue, depending on which is more appropriate.
Some of the proposed packages include the possible privatization of the Kirkland Cemetery, $100,000 to fund a consultant who would update the currently in-place transportation and park impact fees, a records management project and more.
The city’s budget was also discussed at regular meetings on Nov. 19 and will be discussed on Dec. 10. Adoption of any adjustments made to the mid-biennial budget will occur at the latter meeting.