Everett facing $12 million budget shortfall in 2015
The crux of the problem is city revenues are projected to rise by only 2.3 percent per year, compared to a growth rate of 4.1 percent for expenses. Without big changes to city services, that would lead to a $12 million shortfall in 2015, widening to $20 million by 2018.
"The reason we're addressing this now is we have an unsustainable budget model going forward for the city," Stephanson said. "We're not in any crisis in any shape or form right now."
Stephanson addressed the topic at Wednesday's City Council meeting.
For months, department directors have been brainstorming possible fixes. So far, they've come up with 470 suggestions. Details about the most promising ideas are expected at the council's April 2 meeting.
After that, the council is likely to host public workshops about the changes. The city administration hopes to make formal recommendations by June.
"This is going to be a monumental task," Stephanson said.
The mayor believes the solution will include a combination of cost cuts and charging more for some city services.
An obvious target is raising the city's $10, one-time fee to obtain a business license. Permit fees could rise as well.
The financial realities also may force the city to reconsider such issues as how often they run the Jetty Island ferry, which makes daily trips during summer.
The city may look to raise the 4.5 percent tax it imposes on some utility bills, including electricity and gas. Many other cities have a utility tax of about 6 percent.
Everett currently has no tax on garbage pickup or cable service. That could change.
"Across the board, our fees and rates are artificially low," Stephanson told council members Wednesday. "In fact, many of them haven't been adjusted for decades."
To pay for roads, the city may form a transportation benefit district so it can levy a $20 car-tab renewal fee. That's a route that Lynnwood, Edmonds and other local cities have taken.
The mayor also hopes to squeeze about $750,000 in annual savings through procedural or other internal changes.
On the expense side of the ledger, many of the factors driving the increases are beyond the city's control.
They include the cost of providing workers with health insurance, which was rising precipitously before President Barack Obama signed the Affordable Care Act into law.
Most of the city's unionized workers pay nothing toward the cost of their health-care plans. In future contracts, the mayor hopes to put their contribution something on par with the 10 percent that elected and appointed city workers pay.
Unfunded federal and state mandates are another wrinkle. They total an estimated $13.5 million in the current budget. There's no obvious way around that right now. Stephanson's administration points to several realities that limit how much money they're able to bring in.
The city has taken a big hit in tax and utility revenues since Kimberly-Clark shut down its waterfront mill in 2012.
For more than a decade, Initiative 747 has prevented cities and other taxing districts from the temptation of raising property taxes by more than 1 percent per year.
Everett also has failed to attract new large retail businesses, such as the popular Seattle Premium Outlets at Tulalip's Quil Ceda Village, Stephanson said. That's a valuable source of business and sales taxes.
Everett's 2014 budget totals more than $113 million — about 1.3 percent higher than the previous year. It pays for about 735 full-time jobs.
More than $60 million of this year's budget is earmarked for police, firefighting and other aspects of public safety.
Stephanson said public safety is the highest priority, but "that isn't to say we can't look for efficiencies."
Tight budgets have forced the city to eliminate nearly 25 full-time jobs through attrition since 2009. None of those involved public safety personnel.
So far, the city has managed to get by without layoffs. The mayor credits prudent planning in areas such as pre-paying pensions and reserve funds when times were better.
By law, the city must pass a balanced budget.
Noah Haglund: 425-339-3465; email@example.com.
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