YAKIMA — Want to see more money spent on sidewalks? Maybe less on public art? And what about those bumpy roads? Now’s the time to start telling the Yakima City Council where the city should be spending its money.
Officials in all city departments are drafting proposed budgets to be considered by the City Council starting in October.
Departments have been told that any new spending will have to be attached to new revenues.
That’s largely to rebuild the city’s reserve fund, which was drawn down as a result of sluggish sales tax revenues during the 2015 drought, low gas prices and related taxes, and the city’s purchase of the former Tiger Mart properties, said interim Budget and Finance Director Tara Lewis.
Rebuilding the fund within the next two years or before the city seeks bonds for new projects, such as the downtown plaza, is key to maintain or even increase the city’s credit rating.
The reserve fund was at $7.9 million at the end of 2016 — at least $1 million more than originally expected — and could hit $8 million by the end of 2017, Lewis said. The state Budget and Finance Office recommends the reserve fund should be 16 percent of the city’s general budget. That’s about $12 million for Yakima’s $78.5 million general budget, which includes city administration, streets, and parks and recreation.
The city’s bond rating was downgraded in the spring largely because of declining resident incomes and the lack of flexibility offered by a reserve fund several million dollars lower than what the state recommends, according to Standard and Poor’s, the firm that rates the city’s finances.
Officials from the firm said they would be willing to take another look at that rating — which is a factor in determining interest rates when the city borrows money — in the next two years or when the city goes out to bond, whichever is sooner.
Economic promotion
If the city can prove it’s on the right track to replenishing the reserves and is promoting economic development that could increase residents’ income, it will likely see a rating increase, which could make it cheaper to borrow.
City Manager Cliff Moore said the city took some first steps this year largely thanks to careful management by staff. The city saved hundreds of thousands of dollars, mostly from staff positions that were left open such as the assistant city manager, budget and finance director and a few police officers, among others.
“Staff has done a good job about being careful about expenditures — monitoring revenue but limiting expenditures as much as possible,” Moore said. “Our focus is to rebuild our general fund balance reserve.”
This year, the city’s total budget is about $239 million.
Moving forward, council members are expected to approve department budgets that will lend themselves to an additional $4 million added to the reserve fund over the next several years.
