MAKING IT WORK
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COUNCIL PASSES BALANCED 2010 BUDGET; MORE EFFICIENT, MAINTAINS SERVICES
On Monday, November 23, the Council unanimously adopted the City budget for 2010. This action follows two months of work analyzing the Mayor’s proposed budget, reviewing the City’s financial situation, and considering public comments.
While this budget is significantly different from the budget endorsed by the Council in the fall of 2008, most of the changes were made in the Mayor’s budget submittal, and the Council made relatively few modifications. The Mayor was very responsive to the priorities set by the Council in Resolution 31134 (see Issue 4 of this year’s MIW for details). The budget as submitted by the Mayor retained all police officer positions and firefighters for 2010 (including the 21 new police officers in the expansion plan) and all direct service programs for human services, as well as a number of other key priorities such as neighborhood plan updates and key environmental programs.
The Council did modify the Mayor’s proposal by reducing City expenditures by around $5 million and adopting measures to increase general fund revenues by about $3 million. The Council restored or added approximately $3 million to the budget, and dedicated another $5 million to the rainy day fund. We chose to add to the rainy day fund because there remain significant concerns about the City revenues for 2011, and the Council wanted to carry forward enough reserves to maintain some flexibility in the next budget setting process.
In the fall of 2008, the Council adopted an endorsed general fund budget for 2010 of $947 million. While that number was relatively conservative, as the economy had already begun to deteriorate, the deep recession that we have experienced over the last twelve months significantly reduced City revenues for 2009 and our projections for 2010. For the two years, the revenue shortfall equals about $72 million.
The Council and Mayor agreed earlier this year on a package of some $13 million in budget cuts for 2009. Some of these involved cutting positions or programs, which will carry forward into 2010. The Mayor’s proposed 2010 budget cut another $30 million out of the City’s projected spending (including more than 100 positions), added a few new revenues, and proposed taking $25 million out of the rainy day fund, leaving it with a balance of about $5 million. The final adopted budget after the Council’s modifications is $903.5 million, about $43 million less than had been projected a year ago.
Key changes made by the Council include:
- Restoring about $1.4 million in human services programs along with projects that promote public safety by providing human services that keep people out of the criminal justice system, and adding $100,000 for women’s shelters and day centers;
- Adding $860,000 to Seattle Public Libraries, which will restore about two-thirds of the branch library hours proposed to be cut under the Mayor’s budget;
- Funding a new Disabilities Commission and restoring some funds for the Department of Neighborhoods;
- Committing to full funding for the Linden Avenue Main Street project, the key recommendation of the Bitter Lake Neighborhood Plan;
- Restoring some $15 million in drainage and water quality projects in Seattle Public Utilities, which will be funded by raising the Drainage and Wastewater rates by approximately 1.5%.
The Council cut Department budgets by about $4 million, substituted funding from other, non-general fund sources for about $1 million, and added revenues as a result of the minor utility rate increases and an increase in parking fines.
Because of our careful and prudent budgeting in the past, because Seattle has a more balanced and stable revenue structure than the State or County, and because Seattle has not been hit as hard as most areas of the country by the recession, Seattle has managed to keep our vital services going even in this difficult time. We have made modest and responsible budget reductions while actually increasing our police force and human services spending. We will still face a significant budget challenge for 2011, but if the economy continues to recover, we should be able to keep delivering all key services with no significant changes in taxes.
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CITY LIGHT RATE INCREASE MAINTAINS ENERGY INVESTMENTS AND STABILITY
On Monday, November 23rd, the Council adopted new rates for Seattle City Light that will be an average of 13.8% higher than current rates (about $6 per month for the median residential ratepayer). No one on the Council wanted to raise rates, especially in this difficult time for businesses and consumers. However, City Light has some serious financial challenges, and the Council decided that this was a necessary step to take in order to keep the lights on and provide future financial stability.
There is some good news associated with this rate increase:
- This is the first rate increase since 2002. The Council actually decreased rates in 2006.
- The 2010 average system rate (about 6.5 cents per kwh) will be 2 percent higher than in 2002, way less than the rate of inflation, which was 25% for the same period of time.
- City Light’s average system rate in 2010 will still be the lowest among similar sized urban centers in the U.S., and lower than every neighboring jurisdiction except Tacoma.
The 2010 rate increase is needed for four major reasons:
- City Light’s revenues have decreased significantly over the last year, mainly because the recession has lowered the value of the energy that City Light sells to other utilities. The falling price of natural gas (the principle competition) has made City Light less competitive, leading to a gap of some $60 million gap between revenues and expenses.
- At the same time, City Light is going through major challenges in keeping its infrastructure maintained. Reliable power requires continued investment, and cutting this much out of the City Light budget would be a bad choice at the very time when some of the aging transmission and distribution systems require even more maintenance.
- City Light must continue to invest in conservation, renewable resources, and meeting maintenance, salmon recovery, and regulatory requirements for its dams, investments that will pay off in future years.
- These investments require City Light to continue to borrow money, and the turmoil in the capital markets has made it very difficult to do so when City Light is not meeting its current financial performance targets.
Because of these factors, Mayor Nickels proposed a three-phase rate approach for City Light, which included an 8.8% increase for 2010, a 5.4% increase in 2011, and a new rate adjustment clause that could have increased rates in between. After reviewing this proposal, the Council determined that it would be better to do a larger increase for 2010, which will avoid the possibility of a rate adjustment that could increase rates several times a year, and may avoid the need for a rate increase for 2011 if the economy continues to recover. Our decision provides some assurance of stability for customers, and should also ensure that City Light continues to have access to the capital markets at a favorable rate, which will save ratepayers on borrowing costs for many years into the future. If City Light’s bond rating was downgraded, it would be 5 to 10 years before it would likely be able to recover, and ratepayers would bear the costs of higher interest rates for 30 or 40 years into the future.
The rate increase will allow City Light to continue work in 2010 on critical infrastructure that directly impacts system reliability, including:
- Some $15 million in improvements to generating facilities at Boundary Dam, Ross Dam and on the Tolt River;
- Investing $1.4 million to replace relay equipment that protects the distribution system;
- Approximately $2.5 million in Downtown Network improvements;
- $3.3 million to upgrade the First Hill Network equipment to increase electrical reliability for residential, commercial and hospital facilities;
- $5.5 million for neighborhood electrical service improvements, including overhead and underground up-grades for improved reliability;
- About $3.1 million to improve substations to increase service capacity in the Denny Regrade and Belltown network areas;
- Approximately $2 million for overhead equipment upgrades including replacing poles, crossarms and transformers; and
- $3 million for cable and transformer assessment and routine maintenance for vaults and cables.
All of these investments make sense, not only in the long run, but for present service. Borrowing money as part of the funding plan for them is an important way of spreading costs over the years in which ratepayers benefit from the investments, and keeping the interest rates down on that borrowing is a good deal for ratepayers in the long run.
The Council did cut City Light’s budget in some areas, and we are determined to ensure that the utility not only makes the necessary investments in the future, but does so in an efficient and effective way that maximizes the return on investment for ratepayers. We will make ongoing review, appropriate trimming, and continual improvement of City Light’s budget and finances a priority for 2010 and beyond. This new rate provides the breathing room and financial stability to make it possible to do that systematically and methodically, and to continue to make investments in green power, the smart grid, and conservation for our energy future.
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DETACHED ACCESSORY DWELLING UNITS
On Monday, November 2, the Council adopted legislation revising the land use code to allow Backyard Cottages, also known as Detached Accessory Dwelling Units (DADU’s), throughout Seattle. This extends the pilot project that was implemented in SE Seattle to the entire City. DADU’s provide a great way for extended families to share home sites, for homeowners to be able to stay in their homes by having a rental unit, and for communities to benefit from a modest number of additional housing units.
There have been less than 50 units built during the two years that the program has been in effect in South East Seattle, so there is no evidence that this legislation will lead to any kind of rapid or significant change in the nature of Seattle residential communities. Any changes are likely to be positive ones under this carefully constructed legislation.
I was intrigued by maps that were sent to me by critics of this legislation showing what the impact could be if all of the eligible property owners around my house chose to build DADU’s. That could mean three out of five properties, two of which would be across the alley from my house. The house next door might replace an aging garage with a renovated dwelling unit. That would significantly upgrade the block. The house on the other side of mine was subdivided many years ago, and already has the equivalent of a DADU, but on a very small separate lot. I was happy to offer my neighbor an easement for a sewer line under my driveway when the tiny decrepit dwelling on that lot was replaced a few years ago with a cottage that is similar to those allowed under this legislation. Burglars had used the alley to access the houses on our block several times, but since this dwelling unit was built that has stopped.
No land use legislation is perfect, and it may be that this legislation will have to be fine tuned after a few years. However, the legislation is the result of more than a year’s work involving public testimony, surveys, meetings in the community, briefings, and tours. Backyard cottages will be limited to 800 square feet, including garage and storage space. The legislation also prohibits the construction of backyard cottages on lots less than 4,000 square feet or located in a Shoreline District.
Under the legislation, the property owner must live in either the principle structure or the backyard cottage for at least six months out of the year. Other requirements include a side yard setback of at least five feet and limiting the total lot coverage of the principle residence, backyard cottage and any other accessory structures to the current code standard of 35 percent. If a homeowner currently has an attached unit, such as a basement or attic apartment, those homes would not be eligible to build a backyard cottage.
For further details, you can review the legislation by going to Council Bill 116528.
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COUNCIL ORGANIZATION FOR 2010-11
Two new Councilmembers were elected in November, 2009, Sally Bagshaw and Mike O’Brien, replacing retiring Councilmembers Jan Drago and Richard McIver. In addition, Councilmember Nick Licata and I were reelected. You are invited to attend the swearing in ceremony for the newly elected Mayor, City Attorney, and Councilmembers, which will be held on Jan. 4, 2010 at 2 p.m. in Council Chambers, with a reception downstairs immediately after the meeting.
My colleagues have chosen to reelect me for a second term as Council President. I look forward to providing continuity and putting my experience and the Council’s to work as a new Mayor and City Attorney take office in January.
In order to begin work as a new Council as soon as possible, returning Councilmembers and our two new colleagues have started organizing the next Council by agreeing on Committee Chairs and areas of focus. The Committee Chairs have the responsibility for overseeing the work of the Departments under their purview, as well as coordinating and leading the work on the relevant issues. We have also agreed on Committee memberships.
Our next step will be to assign Councilmembers to regional committees, and to begin work on developing Council priorities for 2010. We are looking forward to coordinating those priorities with Mayor-elect Michael McGinn.
Council Committee Chairs will be:
- Councilmember Sally Bagshaw – Parks and Seattle Center
- Councilmember Tim Burgess – Public Safety and Education
- Councilmember Sally Clark – Built Environment (new title, replacing Planning and Land Use)
- Councilmember Jean Godden – Finance and Budget
- Councilmember Bruce Harrell – Energy, Technology and Civil Rights
- Councilmember Nick Licata – Housing, Human Services, and Culture
- Councilmember Mike O’Brien – Seattle Public Utilities and Neighborhoods
- Councilmember Tom Rasmussen – Transportation.
As Council President, I will not oversee any of the major Departments, but will have a new Committee, tentatively entitled Sustainable Communities. This Committee will continue to cover several small offices, including Sustainability and Environment, Intergovernmental Relations, and Emergency Management, and I will also be taking on the Office of Economic Development and Seattle Public Library, two entities that are likely to see major changes in the next two years. One of my goals for the library is to develop a stable source of funding that will make the library less vulnerable to budget cuts during economic downturns, which might mean something similar to the independent Library District that King County has moved to. I will also continue my work on Open Government through this Committee.
The Council will begin the year with three identified Committees of the Whole (Committees covering issues that all Councilmembers are involved in). Councilmember Tom Rasmussen will Chair the Committee on the Alaskan Way Viaduct Project; Councilmembers Sally Clark and Sally Bagshaw will Co-Chair the Committee on Waterfront Planning; and I will Chair the Committee on the SR 520 Replacement Project. We will also begin the year with two Special Committees. Councilmember Jean Godden will Chair the Labor Relations Policy Committee; Councilmember Bruce Harrell will Chair a new Special Committee on Law and Risk Management, which will review City policies and practices on managing claims and judgments and other associated issues.
Council meetings are cablecast live on Seattle Channel 21 and Webcast live. Copies of legislation, archives of previous meetings, and news releases are available on the City Council’s website. Follow the Council on Twitter and on Facebook at Seattle City Council.
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"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its outcome, than to take the lead in introducing a new order of things."
-- Niccolo Machiavelli
"No changing reality to suit the self."
Your Seattle City Councilmember
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