Title
Discussion of Proposal to Revise the Operating Budget Policy to Include a Budget Stabilization Reserve
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to revise the Operating Budget Policy to Include a Budget Stabilization Reserve and forward to full Council for consideration as part of the budget process
Report
Issue:
Whether to revise the Operating Budget Policy to include a Budget Stabilization Reserve and forward to full Council for consideration as part of the budget process
Staff Contact:
Debbie Sullivan, Administrative Services Director, 360.753.8499
Presenter(s):
Debbie Sullivan, Administrative Services Director, 360.753.8499
Background and Analysis:
During the Great Recession, the City experienced severe cuts in service to the community. Overall the recession cost $6 million; 60 employees were laid off; and it took more than nine years to recover.
Over the past several years, the City has benefitted from a strong local and regional economy that has provided sufficient revenues to support key programs and services. Several local revenue indicators suggest that the local economy is beginning to weaken. Sales tax is below projections for 2018, private utility taxes have flattened out and cable TV tax is rapidly declining. Certain expenses such as medical insurance continue to outpace revenues. The City will likely have a budget deficit in the next two to three years.
Staff will present and discuss with Finance Committee a recommendation to revise our existing Operating Budget Policy which was originally written in 1985.
As a best practice, the Governmental Finance Officers Association (GFOA) now recommends establishing a stabilization policy to protect against reducing service levels or raising taxes and fees because of temporary revenue shortfalls. Referenced as a budget stabilization policy, the objective of the policy is to address temporary cash flow shortages resulting...
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