Cities play it safe on budgets
Spending plans for 2013 or 2013-14 are due by end of the year
Saturday, November 3, 2012
BATTLE GROUND -- As Clark County's small cities work to finish their upcoming budgets by the end of the year, they're coping with money restrictions in different ways.
A five-year trend of flat or declining revenue has small cities playing it safe. Budgets for all cities must be completed by the end of the calendar year, making the next few weeks a critical time for the cities' financial directors.
In Battle Ground, the hardest-hit of the cities, Mayor Lisa Walters has a word for the 2013-2014 biennial budget: scary. Declining home values and limited new construction, both revenue-generators for Battle Ground, are forcing city officials to make trade-offs.
The city's proposed biennial budget, which the City Council will review at a Monday evening meeting, lays out about $47 million, an $8 million drop over the city's 2011-2012 budget.
With revenue restricted in recent years, Battle Ground has placed a premium on spending its money conservatively, Walters said. But with rising costs, the tactics haven't been enough to stave off cuts.
Battle Ground is preparing to lay off three employees in 2013. The city hasn't decided which positions will get the ax.
Walters said she fears those cuts could result in a reduction to services.
"It boils down to the core services," she said. "We're so at the core right now that if you lose a person, you lose a department."
Her assessment is echoed by city officials who will sit down this month and hash out a final budget that addresses both the city's financial shortfalls and what services need to stay in place. The city council will receive an update on the budget at its 6 p.m. study session Monday.
City Manager John Williams said Battle Ground is at the point that it may have to cut programs or personnel. "And if you can't fund that program," he said, "you may lose the position that goes along with it."
The trade-offs are tangible. While Battle Ground is poised to lose three employees, the city is gearing up to add new police cars and a new police officer.
Battle Ground's budgetary ramp-down began two biennia ago. The building and real estate markets, which had benefited from a construction boom in the 1990s, tapered off after the assessed value of properties began plummeting in the 2008 housing collapse.
Property values started posting gains again starting in 2010, but home valuations still show negative growth.
Meanwhile, construction began to plummet in 2009 and has yet to rebound. City officials have high hopes for the Mill Creek Town Center retail complex at Southwest Scotton Way and state Highway 503, a project that will include a 154,000-square-foot Walmart store.
Revenue from the city's real estate excise tax declined as a result of the recession that followed the real estate collapse, said Cathy Huber, Battle Ground's financial director.
The city had expected to use the money to pay off bonds it issued in 2006. But after the bottom fell out of the real estate market, the city began dipping into its general fund to pay off its bond obligations, she said.
The city currently owes about $12 million after refinancing at a lower rate in 2010. "After this biennium, we should be OK with those debt obligations," she said.
Elsewhere in the county, city leaders say they plan to make do with what they have heading into 2013.
La Center's tentative budget calls for 423 percent of its $3.9 million general fund balance, or about $16.5 million, to stay in its reserve fund.
La Center's main source for the revenue comes from taxes culled from the city's four card rooms. For the last several years, the city has been maintaining a large contingency fund in the event the proposed Cowlitz Indian Tribe casino gets built.
The city worries that the casino -- which remains embroiled in federal litigation -- would substantially cut its tax base.
"Revenue is flat," said La Center Financial Director Suzanne Levis, looking toward 2013, "but the city will maintain status quo."
On top of that, funding for a number of proposed capital projects in 2013 would come from the city's reserve fund. Those projects could include improvements to Holley Park, a water spray park and skate pad, sidewalk enhancements, lighting for a new baseball field and resurfacing Timmen Road.
In Washougal, the city could pass its budget as early as Nov. 19, said Mayor Sean Guard. He said the city has pared back in the last year on its expenditures.
The city's projected revenue for the next year is $27 million, while the city is proposing a $31.6 million budget. The $4 million gap will be backfilled by bonds and grants for the city's water and sewer projects, Guard said.
"We are being very stingy on what we expend money on," he said.
Washougal doesn't have money for street maintenance, according to the city's budget. That will be an issue the city addresses in the coming year.
In Camas, the proposed 2013 budget for all funds is $58 million, $17 million more than in 2012.
The city says a number of its capital projects appear to have money moving forward. Those projects include extending 38th Avenue, building the Lacamas Lake Lodge and Conference Center, working on the next phase of the city's wastewater treatment plant project and the Friberg-Strunk Road project.
Take the infrastructure projects out of the budget and it's negative, said Camas Mayor Scott Higgins.
Officials in Ridgefield say they're on solid footing heading into 2013, with sales tax revenue increasing 1 percent over the same time last year because of new construction.
Ridgefield is proposing $7.6 million in budget expenses in 2013.
City Councilor Lee Wells said he was "very satisfied" by the budget, which calls for modest gains.
"It makes sense," he said. "Everything in the budget needs to be there."