Tonight's Bellevue City Council meeting is pretty straightforward: budget, budget, budget.
The only discussion item on the agenda is an intro to the 2023-24 biennium budget process. Will likely be a quick meeting, but it's a meaty topic, so we'll see.
Conversation
I covered a lot of the budget discussions as they were happening a year and a half ago, but here's a refresher:
Discussions will center around two parts: the 2023-2024 General Fund (GF) & the 2023-2029 Capital Investment Program (CIP).
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General Fund items are things like staff, fire, police, services, etc. CIP items are actual public works investments - think transportation projects, parks, fields, community centers, etc.
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As the city grows and urbanizes, expenditures will continue to go up. However, Bellevue, like many cities in Washington state, is limited in how much revenues can grow b/c of state requirements limiting property tax growth to 1% annually. dor.wa.gov/forms-publicat
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This imbalance leads to some pessimistic projections: a projected difference of $3 million between GF expenditures and revenues in 2023 grows to over $20 million by 2028. Increasing city staff by even 2-4% would widen this gap further - which sucks, b/c city needs more staff.
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I've mentioned how planning staff is in short supply for a city of its size.
As with any organization, really only three options for the city - reduce expenditures, increase revenues, or use one-time funding sources (like ARPA) to fill in gaps.
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Staff note that since the '21-'22 already required some reductions, reducing the budget further will require difficult tradeoffs. They present several options for increasing revenue, including increasing B&O & utility taxes, or a voter-approved levy (e.g. for affordable housing).
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Staff will also seek Council feedback on whether parks-specific funding options should be explored for parks CIP projects. With the update of the Parks & Open Space Plan nearing completion, staff wanna develop a Parks funding strategy to help w/ land acquisition & development.
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No specific key metrics or KPIs are foreseen yet, but the endeavor will be a collaboration between city's Diversity Advantage Team staff and other departments. They'll develop useful metrics to tell a narrative story on demographics that can complement budget discussions.
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Only registered speaker here tonight is a commuter mentioning how the queue line for the Chick-Fil-A that has now been open for six years *still* backs up into the intersection of NE 8th St & 116th Ave NE, which causes delays.
Seriously peeps, it's not worth that much.
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A person raises his hand and speaks to thank Council for their resolution last week to support Ukraine. Is looking forward to a cultural event that the Ukrainian community will be hosting in September, "hopefully to celebrate the defeat of the Putin regime."
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City Manager Miyake is kicking off the presentation for tonight's budget discussions before transitioning to Toni Call, the director of the city's Finance & Asset Management Department.
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Starting on the left here, staff is approaching department heads with their proposals for their departments. Combined w/ community engagement, these will be filtered according to compliance with Council's stated vision, before being rolled up into a preliminary budget.
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This process is a key example of why all the plan documents I try to get people to comment on are important.
Yes they're general & often wonky, but these vision documents & language are often baked into processes that have tangible impacts on decisions down the line.
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There will be several opportunities for people to provide input via 3 public hearings - one in spring, one in summer, & one in the fall.
True to its brand, Bellevue prioritizes delivering fewer high-quality services rather than spreading funds across more lower-quality programs.
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Pausing for CM questions on the overall budget process and the implementation of an equity lens. Staff say the equity lens in this cycle is meant to provide a baseline that will be refined and tested against in future cycles.
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CM Barksdale: suggests not just looking at data, but also directly syncing with groups from underserved populations. Wants to make sure that equity is explicitly mentioned in the budget principles.
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Noting the stated principle that Bellevue would rather cut services rather than provide more low-quality ones, asks what those services would be. Staff can only think of one time where that's happened - during the Great Recession, BPD bike patrol was cut, but later brought back.
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CM Barksdale wants to make sure that city doesn't cut human services programs.
CM Lee: appreciates the data-oriented approach. Asks if equity approaches used in Tacoma and Port of Seattle (programs city is using for inspiration) were best practices, or why they were chosen.
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Call notes that Tacoma & Port did a good job of mapping data rather than limiting themselves to policy language. Port of Seattle specifically also developed a good baseline for how they were doing in equity, which was helpful for Bellevue.
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CM Stokes: hopes that equity will be looked at not just in the individual pieces, but also how those pieces fit together as a whole.
DM Nieuwenhuis: wants the outreach process to use the MyBellevue app. Wants to know what measures of success will be used for equity lens.
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Staff note that it's still general, but that success will be: "Did we use the data to help make informed decisions? Was it a part of our toolbox?" Tracking the community's engagement with the content will also be helpful.
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CM Zahn, who works at the Port, mentions that the approach is about mapping the data to establish a baseline, then using it to craft goals. "At the end of the day, it's about equity & action." Mentions that the equity lens itself is just one piece of a wider paradigm on equity.
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CM Robertson: supports investing more money in neighborhoods that might need more support. Also notes that if HB 1769 gets signed by Inslee, city will have more money & staff available from no longer having the community councils.
Definitely agree with her on these comments.
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Would appreciate having a list of priorities combined with what the budget is able to fund - having "a black line" with projects above getting funded and projects below missing out would show the Council & community the tradeoffs.
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Mayor Robinson: in addition to an equity lens, she'd also like a sustainability lens. As stated last week, she wants that to be a part of every decision the city makes going forward.
*Fully* agree, cause it will (theoretically) force the city to confront its land use & zoning.
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Inflation in the Seattle metro area, as of July 2021 was 6.3%. Staff are estimating new stats anywhere between 4-7%, but believe 5% is "today's most likely number", but note that it can still change.
1% increase in inflation = $1.2 million more in personnel costs.
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DSA Eastside meetings are the first Monday every month, so until that changes I'll always have to take a little break at around 7. But now I'm back, and continuing with budget talks.
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Staff note it's not just property tax limitations driving an expenditure/revenues imbalance - it's also costs of the increasingly urbanized services the city provides as it grows.
Sales and B&O taxes (most economically sensitive taxes) are 46% of revenue.
They were 40% in 2018.
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A lot of sales tax - about 30% - is from the new construction that's coming in Downtown & BelRed. However, this is just one-time sales tax money. Retail sales tax, which is has grown 4% year-over-year, has been limited by inflation.
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Call: "We've got all the right tools in our toolbox. In our current environment, we're really struggling at having them perform at the level where we're seeing our expenditures growth at."
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A summary of the actions Council took during the last budget cycle to respond to COVID-19 shortfalls.
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The widening gap between revenues & expenditures I showed before has been like this for a while, but 2023 is the first year that the city is starting from a place of expenditures being greater than revenue. Currently a $3M gap, which'll increase to $8M if city wants 4% more FTEs.
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Another break for CM comments.
CM Barksdale: wants to know how nightlife & getting back out after COVID will affect these projections, or if there are other cities that Bellevue can compare itself to. Staff will have to get back on that.
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CM Lee: This is the time for innovation, wants to look at tools are other cities using. Says Amazon and other companies are benefiting from the City's growth, so they need to be a part of the solution, wants to get revenue "more creatively".
... Conrad Lee says tax Amazon? /s
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CM Stokes: says keeping up with development is a challenge. "We're not really set up to be a successful government with how taxes are structured." Is against cutting back on high quality services. "We have a great opportunity & a great future. How are we going to pay for it?"
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DM Nieuwenhuis: asks if there are actions the city's taken in the past to combat high inflation, and if the projections are not aggressive enough. Cites rapid growth in places like South Lake Union and how that type of rapid growth fueled rapid revenue increases in Seattle.
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Staff note that high inflation in the past was accompanied either by low inflation the next year (in the case of the Great Recession) or also high interest rates (in the 80s). Note the city's in uncharted territory in that regard. Feel assumptions for sales & b&o are good.
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