EVERETT — A growing sense of unease about Snohomish County’s finances has some council members wondering whether it’s wise to proceed with construction of a new courthouse in downtown Everett, set to begin in just weeks.
County Council Chairman Dave Somers sent Executive John Lovick a memo last week asking for answers on nine separate issues. Most are general budget questions, not specific to the courthouse. The concerns include escalating labor costs, the potential loss of about $5 million in sales tax revenue at Quil Ceda Village and expenses incurred as a result of the Oso mudslide.
Additionally, Somers and some of his colleagues want a clearer picture of how rising interest rates could affect the $162 million budget for the courthouse project. The county already has sold bonds for roughly half that amount, but has waited on the rest.
Lovick is “asking the council to make decisions on the courthouse and there are all of these loose ends in the budget,” Somers said. “To make a good decision, the council needs to have that information in front of us.”
Crews had been preparing to start demolition in late July to make way for the new eight-story courthouse north of Wall Street. That’s now unlikely until at least mid-August. The County Council has postponed votes on contracts related to the project until Aug. 3, hoping for answers to the budget questions beforehand.
The Everett City Council also is set to vote Wednesday on formalizing a parking agreement for the new building. Disagreements with Everett over parking put the whole project in jeopardy until a tentative agreement in April.
County Councilman Brian Sullivan, a political ally of Lovick, said the executive’s finance staff needs more time to prepare.
Sullivan said it’s a good idea to talk about the courthouse budget, but balked at the broader questions in Somers’ memo.
“When I saw that list, I was a little surprised,” he said.
Sullivan yanked it from the agenda of a meeting he was set to oversee this coming Tuesday.
As the courthouse drama unfolds it is impossible to ignore that Lovick is running for re-election against Somers and three other challengers. The primary election on Aug. 4 will winnow the field to two candidates in November.
Somers and most of the other candidates have made Lovick’s track record on managing county finances a focal point. They warn of a looming crisis.
Lovick contends things are going well.
“I’m here to tell you this: That the sky truly is not falling,” Lovick said during a candidate forum Wednesday in Lynnwood. “When people decide to run for public office, that’s what they’re going to tell you every single day. They’re going to try to convince you that the sky is falling.”
The executive also said people should be asking Somers about the budget, because the council chairman wrote it — or at least a version that Lovick ended up vetoing.
Drafting the 2015 budget grew so contentious last fall that Snohomish County nearly suffered a shutdown. It would have been the first for a county government in state history. Only last-minute compromises averted that fate.
Councilman Terry Ryan wants to avoid that sort of turmoil as elected leaders put together the 2016 budget. Getting more complete information now should help, he said.
“The questions need to be answered soon because the executive is putting a proposed budget together and they’re already giving instructions to departments, but we haven’t been involved,” Ryan said. “I do think it’s a good idea that we all get on the same page first.”
Some of the issues in the memo have been on the radar for a while.
The county could lose about $5 million in sales-tax revenues collected at Quil Ceda Village if the Tulalip Tribes prevail in a federal lawsuit filed in June seeking full control over the taxation of non-tribal businesses on tribal trust land. The potential $5 million hit represents more than 2 percent of the county’s current operating budget.
Meanwhile, the county has been trying to get a better handle on disaster-response reimbursements from state and federal governments, something it’s been monitoring ever since the Oso mudslide struck on March 22, 2014.
Other issues are emerging.
The county could incur a so-called “Cadillac tax” under the Affordable Care Act, also known as Obamacare, because of the high-quality healthcare plans that county employees enjoy.
Tax collections and some other revenues are lower than expected this year.
In early planning for next year’s budget, Lovick’s administration told department leaders to prepare for cuts of up to 6.2 percent. That would trigger layoffs.
Somers questions the worth of a new courthouse, if building it means getting rid of deputy prosecutors, clerks and other employees who keep the criminal justice system running.
“We need to have an honest conversation about where we are financially,” he said.
For Sullivan, it’s too late to go back, with so much already invested in the courthouse project. The county, he noted, even bought furniture — used furniture, for less than half what it would have cost new.
“Going back on a project that’s absolutely necessary is insane,” Sullivan said.
When Lovick became executive in mid-2013, the council had recently decided to build a new courthouse, rather than remodel the existing 1967 building and add a new wing. They had been led to believe that building from scratch wouldn’t cost much more than a remodel.
Lovick’s staff soon determined those cost assumptions — developed when Aaron Reardon was executive — were wildly unrealistic. Acting on advice from Lovick’s office, the County Council in late 2013 settled on a more expensive courthouse design north of Wall Street, and raised property taxes to pay for it.