LYNNWOOD — The city’s finance director abruptly walked out of a City Council meeting this week after a heated exchange over the city’s budget.
Finance director John Moir left 38 minutes into a work session that lasted more than three hours. The moment was captured on the audio recording of the meeting.
“I don’t need this,” Moir said at the time. “I do not need this, folks, I’m leaving.”
Tensions have escalated since February when a new, worst-case scenario put the city’s two-year budget nearly $5 million behind original estimates.
Council members on Wednesday peppered Moir with questions about the way city funds have been allocated to plug budget gaps and whether information was being withheld. They demanded he produce financial statements they’d asked for during a meeting two nights earlier.
“That was kind of the straw that broke the camel’s back,” Councilman Loren Simmonds said.
The economic recession has cut deeply into one of the city’s main sources of income: sales taxes.
From 2008 to 2009, the city, home to Alderwood mall, saw its sales tax collections drop $3.2 million, or more than 17 percent, said Vicki Heilman, the city’s assistant finance director.
Since 2006, some council members have complained that their requests for information on the budget and other issues have been ignored by Mayor Don Gough, who was elected to a second term in November.
Those complaints led to finger-pointing. Gough said he’s giving the council everything it has asked for.
“Everyone is frustrated,” he wrote in an e-mail to The Herald on Friday. “That’s understandable. It’s time for everyone to pause, take three deep breaths and refocus on putting ideas and solutions forward. Identifying and examining solutions is what is in the best interests of our city. Anything else is a distraction, not useful, and a disservice to our city.”
Budget worries came to a head this week during two work sessions.
On Monday, Gough proposed cutting $4.8 million from the budget. Council members considered raising taxes.
On Wednesday, before Moir walked out, Councilwoman Kerri Lonergan asked about financial statements that another councilman had asked for earlier in the week.
The council continued its discussions and Heilman, the assistant finance director, answered more of its questions.
Moir said Wednesday’s fireworks were the result of posturing and finger-pointing by the council and administration.
“They chose to talk about other issues for 45 minutes rather than talking about real solutions,” he said. “You gotta have solutions. You can’t just talk about blame.”
The city’s financial outlook is still bleak.
“We were told everything was hunky-dory, and yet nearly every department in the city has overspent its budget,” Councilman Mark Smith said.
To save money, the city in the middle of 2009 sliced 3.5 percent of its budget with across-the-board cuts and saved more by postponing some capital projects. Under the mayor’s plan, the city would cut more from the $91.7 million general fund budget.
Lynnwood has already depleted its $2 million reserve or “rainy day” fund to plug budget holes. And it has taken $3 million from its utility fund — money that must be paid back — into its general operating fund, the one it uses to pay for basic services such as fire, police as well as employee salaries.
Transcript of the exchange
The following is the exchange between Lynnwood City Councilmembers Kerri Lonergan, Stephanie Wright and Finance Director John Moir leading up to Moir’s walk-out of a March 17 council session.
John Moir: When you borrow from the utility system, $3 million has no impact on fund balances. It provides you with cash in the general fund but is offset on the balance sheet by a payable. What we were doing, and I told you this last fall, we needed to get the inter-fund loan because we needed to get cash for the general fund at year end. And I would argue with you about policy compliance. When you are having the kind of freefall that we’ve had, you are not going to comply with your policies. You should not be surprised by this.
Stephanie Wright: But we should know what they are, that was my point.
Moir: I know. And we’ve been giving you reports on the sales tax decline since the fourth quarter of 2008. And it has been dropping ever since. So, when you lose $4.6 million dollars in annual revenues, your fund balance is going away and your cash position could also go with it but for the transfers at year end.
Kerri Lonergan: John, I seem to remember that on Monday (Councilman) Mark (Smith) asked you about whether we were going to have financial statements.
Lonergan: And I’m not seeing them here tonight.
Moir: We have them in final … we’re getting them in final form. We can’t provide this kind of financial information with two days’ notice and get those things done, too.
Lonergan: OK. I understand. But at the same time, I heard Mark ask you specifically, ‘Will we have financial statements on Wednesday?’ And if you can’t provide it, be frank, be honest, let us know.
Moir: I said by the end of the week. I said by the end of the week.
Lonergan: My apologies, I thought …
Moir: I don’t need this. I do not need this, folks.
Mayor Don Gough: John!
Moir: I’m leaving. No. No sir!