No. 9 city not without its challenges
We are a community with modern and responsive public safety and public works services. We enjoy beautiful parks, vibrant recreation programs and an award-winning new Rosehill Community Center. It is easy to understand why we are the 9th Best Small City in the United States.
However, we experienced declining revenue like every other surrounding community. What sets us apart is that the City Council and I are prioritizing our funds and making difficult choices when to reduce costs. Over the past three years, employees gave up salary increases and three full-time employees were laid off.
We are different by proactively adopting a long-range financial plan that will stabilize city funds for years to come. The financial plan (discussed frequently at council meetings and in The Beacon) is the result of a Long Range Financial Planning Committee of elected officials, citizen volunteers and staff.
The plan … “provide(s) a roadmap for where the city wants to go financially combining financial forecasting with financial strategy to identify problems, opportunities and provide an arena for council, citizens, and staff to discuss financial policy” – and it is doing its job.
Significant reserves allowed the city to cope without serious service reductions. Our homes are safe and protected, streets are clean and maintained and parks have improved.
The city budget has been developed and approved to reduce the general fund reserve from 39 percent of revenues (2010) to 16.7 percent by 2017. We adopted a “gap” closing plan designed to provide fiscal guidelines to eliminate the “gap” in a responsible manner, versus a knee-jerk response.
While all this has been occurring, agencies rating public and private business financial health such as Standard and Poor’s have looked at Mukilteo and given a thumbs up and the highest bond rating in the state.
Standard and Poor’s rationale for Mukilteo’s AAA rating: “The credit strengths include: what we consider to be very strong wealth and income levels; maintenance of very strong unrestricted fund balances; good financial policies and practices; and low to moderate debt burden with low carrying charges.”
We are seeing a recovery of our sales tax revenues, which should result in closing the gap between revenues and expenditures. We are not adding employees and have learned to do more with less and rely more on technology to get city work done.
What about Rosehill? Can we pay the mortgage? Yes.
Rosehill has been a tremendous success and from many different perspectives is financially sound and a model for other communities.
Simply stated, we were smart and fortunate to build the community center when we did (getting an envious 3 percent interest rate and quality bidders that would build for less).
Rosehill was constructed on time and $5 million under architect estimates. In 2011, the building and recreation programs generated more than $381,572 exceeding old Rosehill revenues by $279,069.
The community center supported a 35 percent increase in recreation programs and 45 percent participant increase. Rosehill now has a modern dedicated senior facility and has hosted a dozen free to the community programs from community orchestra to art shows to emergency preparedness fairs, and have brought more than 20,000 visitors to Mukilteo (contributing to a $50,000 increase of lodging tax dollars).
In spite of adding new recreation programs and providing a beautiful facility, money committed from the general fund is $37,300 less than the old Rosehill.
Rosehill, like many Mukilteo homes has a mortgage. The community center’s mortgage is 20 years of bond payments. I pledged, along with other councilmembers, that no property tax or the general fund would pay for the Rosehill mortgage. I still stand by my pledge.
We have made two of our 20 mortgage payments. We will pay $905,000 each year for 20 years. The source of bond payments is from Real Estate Excise taxes (homes and business parcel sales). We are estimated to receive $700,000 in 2012. By design, we also have $2 million in the REET Fund dedicated to debt payment.
Each quarter the finance director reports to the City Council and me on REET revenues and expenditures. REET funds are also used for street chip sealing and other park projects, and so the council has adopted a discipline that with every potential park or street project there is an analysis of the project’s impact on the REET fund.
I believe, with a majority of the council, in balanced budgets by making reasoned and difficult choices among priorities. I believe in finding solutions to problems with open and honest government.
I am proud of the council and staff’s hard work keeping our taxes among the lowest in the county. We may experience other financial challenges, but the City Council and I are being proactive, engaging as many residents as we can and following a course of fiscal responsibility, while offering services and facilities that maintain our high quality of living in Mukilteo.
I encourage any resident to visit with me and share your opinion and expertise about our finances or any other aspect of city services.