For the past several months, the City Council has been working to address our long-term financial issues through the 2016 budget process. In conjunction with our economic development efforts, which is the key to making the City financially sustainable in the long-run, we are working diligently to address our long-run budget issues.

None of this has been easy. We have had an overflowing crowd of residents come down to tell us they don’t want to cut to services … most notably Parks, Recreation & Senior Services. We’ve had large crowds make compelling cases and outlining our need for additional police officers. And we’ve had a few overflowing crowds come tell us not to raise their taxes.

The number of residents weighing in on the budget for 2016 has been impressive, and the input greatly appreciated. It’s in the context of that feedback that we’ve tried to figure out what will work to ensure we keep Des Moines an incredible place to live, and yet meet our obligations for financial sustainability. The last Washington State Auditor’s report (for 2013) essentially demanded that we get this done now, to ensure our sustainability.

We have been working to overcome years of impacts on the revenues our City receives, and to contain costs as best we can.

In 1999 the voters passed Initiative 695 which eliminated the funding source of our Sales Tax Equalization funds. That was 15% of the City’s total revenue. Then in 2001 the voters approved

Initiative 747 which capped property tax collections to 101% of the prior year’s collections, except for new construction. So when we were collecting $2.5 million in property taxes, we received an additional $25,000 the following year. That didn’t pay for the increase in utilities to the City, let alone employee cost increases in health care and COLAs, and other operating expenses. Then the real estate market collapsed, assessed values dropped, and the City lost $3 million PER YEAR in total tax revenues (about 17% of operating expenditures.) And then the Washington State Legislature took away sales tax, excise tax and profits on the sale of liquor (which cities had been receiving for over 80 years) of approximately $400,000 (2% of operating revenues.)

Every time we lost these revenues, the City Council stepped up to make cuts to address them. Since 1999, the City has cut employment by 30% and adopted a number of cost saving measures. There is a structural deficit of about $1.7 million as a result of using one-time money from various construction projects and deferral of putting money into reserves (to replace vehicles, computers, etc.), rather than asking for more tax money from the public. But the economic downturn pushed the anticipation of future revenues from development out by 8 to 10 years.

We’ve been in the process of changing our permitting processes and regulations to actually encourage businesses to locate in Des Moines, rather than the hostile environment that many developers and business people used to deal with here. We need to build an economic base that will support the services our residents say they want, rather than having them carry the bulk of the burden. Those changes are beginning to happen, with the Sheraton Four Point Hotel, the Des Moines Creek Business Park, Wesley Homes renovation, the sale of Landmark on the Sound (old Masonic retirement home) and a number of smaller developments in our Marina District/downtown. Things are beginning to happen that will put us on the right path to sustainability. However, in the end, it will have taken a combination of cuts and some tax increases to get us balanced going forward.

As I said, none of this is easy and none of it happened overnight, but you can be sure that we’ve taken your input into consideration. This won’t be the last we have to address this issue, but we can see the horizon and it is bright.

Thank you again for weighing in and please, stay involved.

Dave Kaplan
Mayor & Councilmember
City of Des Moines, WA