City revenues take a dive

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In another example of how the ailing national economy has spread to Bainbridge, the city finance director is predicting a 5 percent drop in revenues for 2008. Cuts to projects – and maybe new taxes – could be on the way. Read on….

City revenues take unexpected dive
By Tristan Baurick

The city finance director calls it the “fastest and most drastic” city revenues downturn he’s seen in 25 years.

But the nearly 5 percent drop Elray Konkel expects for the rest of 2008 doesn’t mean the city can’t rebound.

With a little discipline and a little imagination, the city should recover the nearly $2 million he’s trimming from an initial expectation of $33 million in revenues.

“I’ve never seen things turn so fast, so much and so soon,” Konkel said of the first three months of the year, which saw unexpected plummets in sales tax, real estate taxes and building and development service revenues, which includes permit fees.

“Three months doesn’t necessarily make a trend, but considering this fall-off, we’re going to watch things closely,” he said.

Konkel has watched over the last few years as a dark cloud spread over the national economy. The Northwest was largely insulated, until now.

“It’s hit us,” he said. “It’s finally hit this community.”

Bainbridge was particularly impacted by a slowdown in home sales and construction.

“They’re just not building or selling homes on Bainbridge,” Konkel said.
Real estate excise taxes alone are likely to sink $500,000 to $1 million below the city’s $2.5 million expectation.

Konkel is proposing a lock on $500,000 worth of the city’s $800,000 contingency fund, which is held for unexpected needs through the year. The city has already spent $100,000, which would leave a contingency of $200,000 under Konkel’s plan. Additional savings could come from leaving an expected eight staff vacancies open until the city’s finances are in better shape. Keeping eight jobs off the payroll could save $300,000.

Coming up with another $1 million means the mayor and City Council will have to put their heads together. Cuts could come out of operations and capital projects budgets, Konkel suggested.

“The council has a new financial reality,” said Councilman Barry Peters, a member of the council’s finance committee. “Fortunately, the council is committed to facing that reality.”

He supports Konkel’s cost savings proposals and believes the council should cut deeper into some of the city’s multi-million dollar projects. As an example, he points to the recent trim of almost $7 million from the Winslow Way utility and street upgrade project.

“Paring down capital projects is the kind of essential work we need to do,” Peters said.
Peters would also like the city to enact a motor vehicle excise tax to pull in additional revenues. Charging owners $20 per vehicle, the tax could generate $6 million to offset and possibly expand road repair and maintenance costs.

Despite the city’s financial challenges, Peters and Konkel stressed that the city is not bound for bankruptcy, as some councilors and citizens have suggested.

“That’s not at all the case,” Peters said. “We have $6 million in the bank and a council united in recognizing the new financial constraints. We’re not going to drive the city into insolvency.”

5 thoughts on “City revenues take a dive

  1. Is sales tax revenue coming in at a figure that is less than projected for the budget, or less than for this same period last year?

    “…which saw unexpected plummets in sales tax, real estate [excise?] taxes and building and development service revenues, which includes permit fees.”

    I looked at the state Dep’t of Revenue web page and found that they are reporting an increase in sales tax distributions to Bainbridge Island. Last year’s first quarter distribution was $736,293.78. This year’s first quarter distribution is $757,596.53.

    It looks like an increase of 2.89 percent in local sales tax revenue distributed to the city, comparing last year to this year.

    Am I misunderstanding the article, the DOR numbers, or what?

  2. Raise taxes-that seems to be the answer to all woes. How about cutting the headcount and its associated benefits back to that of other City’s our size to save monies and offset any losses. The people of this State have tried over and over again with initiatives to tell the politicians NO NEW TAXES. Message apparently hasn’t been received by some on the Council.

  3. Get Real Determined. The issue isn’t No New Taxes and your attempts to impose bad Calif. law on WA residents have been pathetic.

    The issue on the table is the total lack of mayoral and administrative competence, accountancy and transparent process.

  4. Agree 100% that the issue is the lack of Mayoral leadership and ability-My tax issue is that the answer as proposed by at least one Council person is to raise a new tax, a City Automobile excise tax. NO new taxes-how about bringing our City headcount in line, prioritization, and zero base budgeting?

  5. Whenever I read an article about our COBI government, I wonder who/why anyone has voted for our mayor. She must have supporters, but who are they? What are they thinking? Do we really have to change our form of government to get rid of her?

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