LYNNWOOD — Lynnwood has been known as a city without money problems.
Not anymore, said Mayor Mike McKinnon.
“We used to be known for that. Now we’re hurting,” McKinnon said. The city’s budget, including new programs, is $5.5 million out of whack.
Along with many cuts, the mayor has recommended in his preliminary budget a new 1.5 percent utility tax, a 20 percent increase in property tax over the next two years and some business license fee increases to get Lynnwood back on track. The mayor will have his final recommendations by Nov. 18.
Reasons for the pain, McKinnon said, are threefold: No property tax increase since 1995, council spending too much of its reserve account in the past to balance the budget and a bad economy.
Lynnwood has been known for its large sales tax revenue, but the city too is feeling the pressures of the current economy, said McKinnon, who is an accountant by trade.
“Sales tax revenues have been going up, until 2002,” he said.
McKinnon said his recommendation to take care of the 12 percent shortfall is make some cuts – $3.08 million worth – and increase revenue by $2.4 million, which then balances the 2003 budget at $32.5 million.
While McKinnon is concerned that the council has previously used the reserve account to balance the budget, he is suggesting $348,061 be taken out of it over the next two years to do the same thing. He added, however, he is still looking into making more cuts rather than using this reserve.
“We can’t keep spending (the reserve account),” McKinnon said, “if we are going to have these expenses we need to start paying for them.”
One way is through a first time 1.5 percent utility tax which would bring $1.6 million in revenue to the city over the next two years, he said. Another is through a property tax increase.
For now, McKinnon has recommended raising the property tax to the state’s allowable limit and using some untapped property-tax capacity which would take a 5-2 vote of the council to approve.
The city is allowed to increase property taxes by 1 percent. This option alone would cost the owner of a $200,000 home $4.50 in additonal taxes next year, city officials said.
Also, the city still has past untapped property tax revenue – called “banked capacity” – equal to a 20 percent increase for the next two years, McKinnon said. Levying this increase would bring in $1.2 million over the next two years and cost the owner of a $200,000 home $59 per year. Both the 1 percent and the banked capacity would create an estimated $64 increase per year.
Another revenue source McKinnon and other city officials are considering but may change, he said, are raising business license fees. Possibilities include raising the head fee from $9.50 to $10 and possibly adding a new square foot fee, but keeping the base fee the same, which varies on business type.
In the cutting realm, the mayor is suggesting cutting 6.7 positions and tons of overtime in most departments, saying overtime will be allowed only in emergencies. Cutting the overtime, including administrative leave, will save the city approximately $550,000 over the next the two years, officials said. Instead employees will benefit from what he calls “flex time.”
Another cut, while not huge in the checkbook, could be huge to citizens.
It is recommended to cut the city’s annual special events, such as the egg hunt, Fourth of July celebrations and Civic Lights. This will save the city almost $63,000 over the next two years.
Eliminating the Arts Performance series, Fantastic Fridays, Saturday Matinee, WonderStage and Shakespeare in the Park are also recommended to be cut. This would save the city $31,000 over the next two years.
“Wish lists” from city department heads added up to be a few million dollars over the 2002 general fund budget of $31.8 million. Included in those wish lists were $1.7 million worth of new programs.
The mayor’s budget recommendation includes some of the new programs, such as $446,237 over the next two years for switching from Medic 7 to fire-based paramedic service, $158,969 for 800 Megahertz (the joint jurisdiction radio communication system enhancement) and $50,600 for a new school resource officer for the next two years.
Citizens are encouraged to add their “two cents” at one of the final two budget public hearings. They start at 7 p.m. Tuesday, Nov. 12 and Tuesday, Nov. 25. The mayor will have final recommendations by Nov. 18.
The mayor’s final recommendations on the proposed budget will be debated by the City Council and then its final budget will be decided on by Dec. 11.
For more information about the Lynnwood budget hearings or the proposed budget call 425-670-6604 or see www.ci.lynnwood.wa.us.
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