Fiscal irresponsibility at Sammamish City Hall

Commentary

Gerend 2

Mayor Don Gerend

As the Sammamish City Council heads into its retreat tomorrow evening, there is one topic that will get short shrift: the City’s finances.

In Monday’s Sammamish Comment post, I outlined the City’s own 2017-2018 budget that has a 73% decline in its cash balance from the end of 2016 to the end 0f 2018.

The budget has a 30-minute allocation on the retreat agenda. It’s not enough, and the City Council has been ducking the budget ramifications for the last two years.

The City faces being out of cash in 2019 at the current spend rate. (See Operations vs Capital Funds, below.) Action needs to be taken this year. It’s been put off yet again.

There is simply no other way to put it: the City Council and Administration have been irresponsible to not face up to the coming budget realities sooner.

Operations vs Capital Funds

The oft-talked about “cross-over” point where expenses outpace revenues comes in 2020, based on the current projections. This confuses the public.

The cross-over relates to the operating fund only.

When capital funds are included, the cash balance is depleted in 2019 at the current spend rate. Sammamish Comment detailed the capital fund balances projected at the end of 2018 in its post Monday.

Capital funds are being financed from impact fees and the general fund.

The retreat presentation included in the Council packet does not have a cash flow chart of all funds.

No action in 2015 election year

Valderrama

Ramiro Valderrama

Member Ramiro Valderrama, the Council’s often fingernail-grating irritant, tried throughout 2015 to get the Council to face up to the coming budget crisis. But 2015 was an election year (Valderrama’s included). Then-Mayor Tom Vance was up for reelection. An open seat for which former Mayor Mark Cross was running was contested.

Vance, Deputy Mayor Kathy Huckabay and Members Tom Odell and Bob Keller, the ruling majority, rejected Valderrama’s call for action. So did then-City Manager Ben Yazici.

Vance and Cross went on to defeat, by Tom Hornish and Christie Malchow.

Power-Point Rangers

The retreat in January 2016 had a conversation similar to what’s in the Council packet for this year’s retreat: a Power-Point-driven discussion. But no action.

Lyman Howard

Lyman Howard

Lyman Howard, who is now City Manager and who was then the designated successor to City Manager Ben Yazici, to his credit raised the alarm. He was the City’s finance directors for years before elevating to deputy city manager. He succeeded Yazici March 1.

But the City Council did nothing.

No action planned in this election year

Nor does anything seem to be planned to act this year, either. Surprise, surprise: it’s a City Council election year.

Odell, Huckabay, Keller (now Deputy Mayor) and Mayor Don Gerend are up for election in November. None has said, at least publicly, if he or she will seek reelection or retire at the end of the term. Filing dates are May 1-12, so they must decide by then.

Huckabay, Odell and Hornish are on the Council’s finance committee.

In a recent meeting, Huckabay twice said, “remember, this is an election year” when discussing potential taxes, say those who were present.

Odell and Huckabay said that methods have been “explored” to “extrude” revenue from the two water districts, according to Harry Shedd, who attended the meeting. Shedd is chairman of Citizens for Sammamish.

The current plan, if you can call it such, is to have a study session later this year, a public involvement and act next year.

Not soon enough

Next year will be too little, too late.

Based on the current budget, Sammamish’s cash balance will be a mere $17m by the end of next year. There was $62m in the bank at the end of 2016.

Revenues for the two years are forecast at $154m and expenditures at $199m. It doesn’t take a rocket scientist to see that the City will run out of cash in 2019, not in 2020 (which is the projected cross-over point).

Yet, the City Council sits around fat, dumb and happy, without the political courage to do what clearly must be done: impose new taxes, especially with tens of millions of dollars of road projects that are coming.

Cutting costs good idea, but not feasible

The obvious alternative is to cut costs. But, to be honest, this isn’t feasible.

Tom Odell

Tom Odell

Odell, who after Valderrama is probably the least likely to be afraid to call a spade a spade, put his finger on the problem a few times over the last year or two: Sammamish neglected its road infrastructure for 10 years and the chickens are coming home to roost.

Odell even said that new debt will be required to fund the road improvements.

But when it came time to step up and push for debt—which means new taxes to service it—Odell is silent.

It’s an election year.

Too little, too late

Waiting until next year to bite the bullet and raise taxes is too little, too late. It’s also irresponsible.

From a practical standpoint, any adoption of new taxes won’t happen until well into the year. Whether the four incumbents (Gerend, Keller, Huckabay and Odell) seek reelection or not, there is already a widespread belief at least one or two of the seats will turn over. Newcomers to the Council aren’t likely to vote for new taxes their first day, or even first month, in office without fully understanding the issues.

Collecting revenues wouldn’t begin until well into the year.

In the meantime, the cash balances continue to decline.

The City Council needs to act this year to shore up its cash.

It’s the fiscally prudent thing to do. It will require political courage. It will require leadership by Mayor Gerend and Deputy Mayor Keller.

I’m not holding my breath.

By Scott Hamilton

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5 Responses to Fiscal irresponsibility at Sammamish City Hall

  1. Frank Blau says:

    Gee, we elect entertainer libertarians, pro-property rights conservatives and (as my Dad called them) “Gucci Liberals” who think “Tax” is a four-letter word and then we don’t have any adequate Tax Revenue in our fiscal plan? Well I for one am shocked, I say, shocked! The vastly regressive taxation dreams of the American (and local) political establishment is an embarrassment to anyone (myself included) that believes in strong, well-funded social contracts for services and infrastructure.

  2. hwmaine04@comcast.net says:

    Here we go again. What ever happened to the magic money engineering under the previous City Manager Magic Ben? One must wonder if this was just a game to mislead the public. Where is the surplus?

    A township that has limited sources to generate revenue – only the homeowners. It was rated as the best managed city and now is going broke. The rapid growth is bringing only revenue on a short term basis. What is the long range plan? The socialist Governor Insley generated $2 Billion with his pot business and plenty of tax revenue- the new gold mining operation?

    H.W. Maine

    >

    • Frank Blau says:

      Your math and characterization of Governor Insley as a “socialist” are wrong. Washington State VOTERS approved marijuana legalization; It wasn’t a transfer of wealth from the private sector to the state, as a socialist would do. Marijuana sales generated over $1 Billion in REVENUE, which in turn generated about $250 MILLION in excise taxes. Again, all things approved by democratic process, not socialism. As far as I know (and you are free to find a source showing otherwise), Governor Insley has no personal investment in or profit from any Marijuana growing or distribution companies. But even if he did, that would be, you know, Capitalism, not Socialism.

  3. Stan Gunno says:

    Too many nice to have projects that were not needed. Could have waited and money would have become free to make them happen. Like a child, it is easy to convert a want into a need. A child can determine a big screen tv is a need when in fact it is a want. Saw it coming years ago.

  4. Pingback: Seatax fatigue may affect Sammamish tax need | Sammamish Comment

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