MAKING IT WORK
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BUDGET 2011: WHAT WE KNOW SO FAR
On Monday, September 27, Mayor McGinn delivered his proposed budget for 2011-2012 to the Council. The General Fund (excluding transportation) is proposed at $888 million, $13.7 million less than the 2010 adopted budget. Transportation and utility budgets increase.
On Monday, September 27, Mayor McGinn delivered his proposed budget for 2011-2012 to the Council. Details of the Mayor’s budget are usually not revealed in advance of the formal presentation, but this budget process was somewhat less transparent than past budgets have been. Key policy proposals were not discussed with Councilmembers in advance, and outside agencies and constituencies whose funding was cut or eliminated were generally not consulted.
The Council has two months to review and approve the budget. We are working hard to understand the details and identify critical policy decisions and potential budget changes prior to beginning to make decisions in early November.
Here’s a snapshot of what we know to date:
General Fund (excluding transportation). Proposed at $888 million, $13.7 million less than the 2010 adopted budget.
- Although General Fund resources are down $13.7 million from the 2010 adopted budget level, the Mayor suggested that he faced a $67 million deficit in the projected 2011 budget. This is based on a number of assumptions, including not carrying forward reductions already taken in 2010.
- Other key drivers include the effects of cost of living clauses in labor contracts, increasing health care costs, and the need to add funds for pension liabilities, which add up to a projected increase in expenditures of around $35 million.
- In addition, a number of one-time revenue sources were used to balance the 2010 budget, including more than $11 million of the City’s Rainy Day Fund.
- To balance the revenue shortfalls, increased expenditures, and loss of one-time revenues, the Mayor is proposing a series of spending reductions, revenue increases, and $11 million in newly identified one-time sources.
- Some $12 million was already cut from the 2010 budget in mid-year reductions, most which carry forward into 2011.
- Renegotiations of cost of living increases save about $2 million for the general fund, and the reduction of some 294 positions, mostly in the general fund, essentially cover the gap between revenues and expenses. Some of these positions reflect streamlining and efficiencies, while others are actual reductions in services. For comparison, 235 positions were eliminated in the 2002-2003 recession.
- Proposed revenue increases total $23 million. The majority of these are vehicle user charges, including $10+ million from increased parking rates and fines and $3.4 million from vehicle license fees. Most of the rest comes from various fee increases at community centers, the library, and public safety inspections and other fees.
- Almost all police, fire, and human services programs take only modest reductions, mainly in staffing. Some of these, such as cuts in domestic violence service providers, are significant, but the total reductions are relatively small.
- Major reductions in Parks and Community Centers include ending environmental learning centers and significant service reductions at Rainier Beach, Alki, Ballard, Laurelhurst, Queen Anne, and Green Lake Community Centers.
- The Seattle Public Library budget is cut by 8.5%, but a new system for managing branch libraries will cushion most of the impacts, with no cuts in hours and modest cuts in the collection budget.
- The Department of Neighborhoods has the most significant reductions, with seven of the thirteen neighborhood service centers closed and an $800,000 cut in the Neighborhood Matching Fund.
Transportation. The budget increases by about 1%, from $310 million in 2010 to $313 million in 2011.
- About one-third of this budget is for major capital projects. Most of these have dedicated funding sources, often from federal or state grants, and the funds cannot be used for other purposes. Bids for some of these projects are coming in lower than engineering estimates, and any city funds involved can potentially be reprogrammed at some point.
- Funds for major maintenance projects and operations come from a blend of general fund, the Bridging the Gap program, and grants and bonds. There is more flexibility in this funding, although the Bridging the Gap funds do have specific goals.
- The Mayor’s budget reduces general fund support by about $6 million from 2010 to 2011.
- The Mayor adds $9 million from a $20 Vehicle License Fee and the already approved 2.5% additional parking tax dedicated to the seawall project (bringing the parking tax to 12.5%). The Mayor also proposes $10 million from an additional 5% parking tax.
- These funds are spread over a variety of transportation functions. Since the Council already told the Mayor that we are unlikely to approve the additional parking tax, we will have to cut or find replacement revenues for about $10 million in the Transportation budget.
Utilities. The Mayor proposes rate increases of 4.3% for City Light rates, 7.5% for solid waste, 12.8% for drainage, and 4% for wastewater, along with an already approved 3.5% water rate increase.
- The Council has reviewed the drainage and wastewater proposals, and the Committee has approved budgets generally in line with the proposals. These are the smallest components of the utility bill, and the increases are necessary for several reasons, most saliently in order to fulfill the terms of a compliance order from the Environmental Protection agency requiring improvements in the City’s management of combined sewer overflows. These are critical steps towards reducing pollution in Puget Sound.
- The solid waste rate increases are driven by the rebuilding of the North and South Transfer Stations. Once those are completed, the rates are likely to be stable in the future. The Council has approved a pilot program to study moving to every other week garbage collections, which could reduce future budgets by about $6 million annually.
- The Council is most concerned about the increase for City Light. While the proposal is relatively modest, there have been two increases in the last year, which were intended to stabilize City Light’s difficult financial situation. The Council will thoroughly review this proposal before taking action.
The City’s budget picture is difficult, but not as challenging as the State or County situations. The Council will have some difficult choices – whether to approve the parking meter increases, what to do about the several million dollars in cuts to important community services, how to manage the transportation department problems and what do to about City Light.
These problems may be exacerbated by the November election. If the initiatives to repeal the candy tax and realign the liquor sales system are approved, there will be an additional $5 million revenue reduction to manage for 2011, with greater impacts in the following years.
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COUNCIL RECOMMENDS “NO” ON INITIATIVE 1107, “APPROVE” REFERENDUM 52, “APPROVE” SEATTLE SCHOOL LEVY
Facing severe budget cuts at the city, county, and state levels, the Seattle City Council took unanimous, formal positions on three ballot initiatives that could have significant impacts on Seattle. The Council took these positions following the procedures prescribed in State Law.
The Seattle City Council unanimously recommends that voters say “No” on State Initiative 1107 (I-1107), “Approve” State Referendum 52, and “Approve” Seattle Public Schools District Proposition 1. The Council took these positions following the procedures prescribed in State Law, which require the council to provide equal time for members of the public to comment in support of and in opposition to ballot measures that the Council is considering taking a formal position on.
I-1107 would reverse certain 2010 legislative changes to state tax laws, resulting in elimination of the sales tax on items such as candy and gum. This initiative would also stop the temporary sales tax on bottled water and certain carbonated beverages. The money raised from the current tax is approximately $100 million per year which funds schools, health care, and essential services for vulnerable seniors and children. I-1107 would not only reduce the state budget, but cost the City budget almost $2 million annually. Seattle is already facing deep cuts in our budget, more than half of which funds public safety.
State Referendum 52 would extend the sales tax on bottled water to support bonds to finance energy efficiency construction and repair projects in public schools and higher education buildings.
Seattle Public School District’s Proposition 1 is a levy that would raise approximately $48.2 million to be collected between 2011 and 2013. These funds would replace reduced State funding and be used to provide educational programs and services and implement teacher support and evaluation initiatives.
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COUNCIL TAKES ACTION ON UNWANTED PHONE BOOKS
Tired of those phone books arriving in plastic bags on your doorstep? On Monday, October 11, the Seattle City Council adopted an ordinance regulating the distribution of unwanted yellow pages phone books, the next step towards Zero Waste in Seattle. The new law creates an Opt-Out Registry that Seattle residents and businesses can access on the web, by phone or by mail, which will be operated by an independent contractor.
On Monday, October 11, the Seattle City Council adopted an ordinance regulating the distribution of unwanted yellow pages phone books, the next step towards Zero Waste in Seattle.
The new law creates an Opt-Out Registry that Seattle residents and businesses can access on the web, by phone or by mail, which will be operated by an independent contractor. Yellow pages publishers will pay 14 cents per book to cover the costs of operating the registry. The legislation includes penalties for yellow pages publishers who continue to deliver books when requested not to.
The legislation also includes charging an ‘Advanced Disposal Fee’ of $148/ton to the companies to cover the cost of recycling phone books. Since the Advanced Disposal Fee will be based on the number of phone books distributed, there will be an economic incentive for the companies to honor opt-out requests. Seattle Public Utilities estimates that it costs the City $350,000 annually to recycle yellow pages phone.
I initiated the Zero Waste Strategy in 2007. Councilmember Mike O’Brien now chairs the Committee that oversees it, and has taken the lead in moving Zero Waste to the next level. Councilmember O’Brien’s Committee has endorsed a budget proposal to require food waste composting in multi-family buildings, and a pilot project for every other week garbage collection for single-family residences. While some multi-family buildings currently offer food waste composting, the Zero Waste Strategy called for a mandatory program, as is currently in place for single family. The diversion of food waste from garbage cans to composting has reduced the amount of garbage collected from single family, allowing Seattle to consider every other week garbage collection, as envisioned in the Zero Waste Strategy.
The goal of Zero Waste is to actually reduce the amount of waste that the City sends to the landfill. Resolution 30990 set as City policy that we will not dispose of any more total solid waste in future years than went to the landfill in 2006, 438,000 tons, and that for the next five years, the City will reduce the amount of solid waste disposed by at least 1% per year.
We have overachieved. Waste sent to the landfill was cut by 10.2% in 2008 and 10.9% more in 2009, to a total of 352,000 tons. While some of this decrease could be the result of the economic downturn (garbage generation traditionally decreases during recessions), probably at least half of it is the result of the actions taken through the Zero Waste Initiative. And there is a lot more action to come.
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MOHAI, THE CITY, THE STATE, AND THE MONEY
In a win-win for the Museum of History and Industry (MOHAI) and the City of Seattle, on Monday, September 27, the Council unanimously adopted an ordinance approving an agreement with MOHAI regarding its relocation to the South Lake Union Armory. The agreement saves the city money and adds certainty for MOHAI’s relocation to proceed.
On Monday, September 27, the Council unanimously adopted an ordinance approving an agreement with the Museum of History and Industry (MOHAI). MOHAI and the City have been working together to plan a relocation of this important cultural resource for many years, and that cooperation has resulted in a plan to relocate MOHAI to the South Lake Union Armory.
No City of Seattle General Fund dollars will be used for the move of the museum, the rehabilitation of the Armory, the transformation of the Armory into a museum, or the ongoing operations of the museum. Instead, the City will save general dollars by having MOHAI take on the responsibility of fully restoring and maintaining the historic SLU Armory, a building that the City owns and cannot afford to renovate. Once the museum opens, an annual maintenance contribution will be made, but MOHAI’s overall responsibility for maintenance will be significantly greater than that contribution.
MOHAI’s financial plan for the SLU move and the transformation of the Armory involves combining private funds with funds from the sale of its former expansion space near the Convention Center and mitigation funds received from the State, which is taking the current MOHAI building and land for the SR 520 project. No new city capital funds will be used for this project.
At the city’s request, MOHAI was able to successfully negotiate with the State to secure $40 million in compensation for the existing museum building (originally built with private funds), almost half of their $85 million budget for the relocation. This is midway between the estimated value of the shell building ($15 million – what the City would have received) and MOHAI’s valuation of the functioning museum ($57 million).
The City also assigned to MOHAI the projected revenues from the State’s use of the land under the building, which the City owns, anticipating that MOHAI could also negotiate more compensation based on the museum use than the City could. MOHAI and the City agreed that this was likely to return about $7 million to MOHAI.
Late last year, the State indicated that they wanted to purchase, rather than use via a construction easement, the land. MOHAI and the City negotiated a new agreement, assigning 50% of the proceeds to the City. At the request of the Mayor, MOHAI again renegotiated the agreement this spring, increasing the City’s share to 60% and capping the MOHAI share at the planned $7 million. The City’s general fund will benefit as a result. MOHAI is also negotiating on behalf of the city (and at MOHAI’s expense) compensation for the City’s loss of parkland use, which is expected to result in several million dollars in revenues for the City’s general fund.
MOHAI will take on a City liability in the South Lake Union Armory, saving taxpayers the $18 to $20 million the City estimates it would need to spend to make the Armory usable, and transform it into an asset. MOHAI will receive no general fund money, and in fact the already renegotiated agreement will benefit Seattle’s general fund. All funds that MOHAI receives will be State gas tax or SR 520 toll revenues that can only be used for State transportation purposes.
Recognizing the challenges that the recession places on Seattle’s budget, MOHAI has agreed with the Council to loan the City $8.5 million in 2011 and 2012. These funds can be used for general fund purposes and will help us support essential public safety and human services programs. Under our agreement, the City will pay MOHAI back in future years when the construction money is needed and the economy and the City’s budget will hopefully have recovered.
Council approval of these agreements with MOHAI is a win-win for all of us. Beyond that, it keeps faith with the series of agreements that the City and MOHAI have negotiated over the years, the final version of which was signed by the Mayor’s staff in June.
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"A major concern today is that the very impulse to protect and invigorate individual preferences may diminish a broader sense of social bonds and trust necessary for collective action. The growth of exaggerated individualism in civil society becomes clearly one of the preeminent public concerns for liberal democracy.
The tendency in Western societies to accentuate want-satisfaction over civic formation threatens the pursuit of public goods. The financier and philanthropist, George Soros, shares this concern over what he expresses as the rising dominance of the self-interest values of the market: “Market values express only what one participant is willing to pay another in free exchange and do not give expression to their collective interests.”
To the degree that civil society's ability to balance the pursuit of private interest with public well-being is diminished, to that degree is liberal democracy endangered. The health and evolution of civil society thus has profound importance for the unfolding of political life in the 21st century."
-- Bruce Seivers
"The public doesn’t know anything about wasting government money, we’re the experts."
-- Sir Humphrey, Cabinet Secretary (BBC production Yes, Minister)
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Your Seattle City Councilmember
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