Budget woes hit council

Published 9:00 pm Sunday, April 4, 2004

The Snohomish County Economic Development Council is facing a cash shortfall after the city of Everett left funding for the business recruitment agency out of its 2004 budget.

Members of Everett Mayor Ray Stephanson’s administration point the finger at former mayor Frank Anderson, saying Anderson didn’t include any money for the development council in the budget Stephanson inherited when he took office.

But Anderson says he did set aside $50,000 for economic development. He just didn’t earmark it for the EDC, he said, because he wanted a City Council debate on whether giving money to the agency was the best way for the city to attract new business.

The bottom line is that the development council has a big hole in its $650,000 budget, and that could result in layoffs and cutbacks in business recruitment, said Deborah Knutson, the EDC president.

“It is a big chunk and from our largest city,” she said. “There will have to be some changes in our work plan.”

The Economic Development Council is a public-private consortium that works on new business recruitment and on public policy issues important to businesses. Its mission, according to its literature, is “everything it takes to attract and retain businesses, and create competitive high-wage jobs.”

It gets much of its funding from local governments, with the rest coming from the private sector. The council’s board of directors includes elected officials – including Stephanson, County Executive Aaron Reardon and Lynnwood Mayor Mike McKinnon – as well as representatives from the Boeing Co., Verizon and a range of other businesses and agencies.

The city of Everett has been its No. 1 contributor.

The development council played a role in last year’s successful campaign to convince Boeing to locate final assembly of the 7E7 in Everett – the biggest business recruitment prize nationwide in 2003.

However, the council in the two previous years had fallen short of its job-creation targets.

Anderson said he was not convinced that the city of Everett was getting its money’s worth from its $50,000 donation.

“We didn’t feel we were properly represented or getting value for our dollars,” he said.

Anderson said last week that he spoke to development council leaders about the issue last year.

Anderson said he budgeted $50,000 for general economic development in 2004, with the idea the City Council and he would debate the issue later and then decide how to spend it.

Before that could happen, Anderson was defeated in the November election by Stephanson.

When the new mayor’s staff took over, it didn’t find any money specified for the development council, said McMullin, who was the city’s economic development director in 2003 under Anderson, and is now city executive director under Stephanson.

The EDC funding was “left out, along with a couple of other memberships, we’ve noticed,” McMullin said.

The new administration has managed to scrape together $10,000 for the development council, and wants to come up with the full amount. But it’s not easy, she said, given that the city has a budget shortfall of its own and is planning to lay off employees.

“We need to find it someplace,” she said. “How we do that is the question.”

McMullin said the Stephanson administration is committed to working with the EDC and other agencies. “We certainly know we have to go forward regionally.”

But the bottom line is that the city needs to look after its own interests first, she said. “We’ve got to balance those two needs on a tight budget.”

The city has hired a new economic development director to focus on downtown Everett. Her efforts will help beyond the city limits, McMullin said, because “how the downtown goes, so goes the whole community.”

Knutson said she “initially freaked out” when confronted with the issue. She said her organization had met with all its major donors last year before making its 2004 plans, and “there wasn’t an indication at that time that the budget would be cut.”

This year’s plans were based on the idea that the development council would push to capitalize on publicity generated by last year’s successful 7E7 campaign and do more out-of-state recruiting.

The plan was for more travel, to trade shows and to visit with potential new companies, she said. The council also was looking to place more ads in trade magazines.

Knutson said the EDC still is trying to figure out what it can afford to do with the reduced funding. Part of that depends on whether Everett can come up with money on top of the $10,000 contribution.

“We don’t know what that will ultimately mean,” she said.

Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.