City to engage Mercer Island public on budget challenges

City Manager Julie Underwood and Finance Director Chip Corder will soon be reaching out to the public to figure out how to address upcoming deficits in the Mercer Island budget.

Significant deficits are projected in 2017-2018 in the General Fund and Youth and Family Services (YFS) Fund, which account for most of the city’s services, excluding utilities.

To maintain current service levels, a new, ongoing revenue source is needed, according to Corder, or 27 percent of the city’s workforce will have to be cut in 2019-2024.

“We’re down to having difficult conversations with our community,” Underwood said during a July 17 council study session on the topic. “We’re talking a $2 million deficit in the next biennium… And I believe you have a revenue problem, not an expenditure problem.”

Councilmember Dan Grausz said that spending also has to be a part of the conversation. He noted that previous councils have looked at other service delivery models, such as creating a regional fire authority with Bellevue or contracting police with the King County Sheriff. Another option is to leave the King County Library System. Grausz said that other cities have also bridged the gap with more development and density, which may not be what Mercer Island citizens want.

“Islanders need to make some decisions, and if you don’t want to make those kinds of structural changes, there’s only one road you’re headed down,” Grausz said. “You can continue to have local services, but this is the price tag for doing that.”

Originally, staff had recommended conducting a public engagement process in February-April 2017, following the adoption of the 2017-2018 budget.

“However, the city’s I-90 loss of mobility negotiations with Sound Transit became an all-consuming issue for the council, the city manager’s office and the community in the first half of 2017. In addition, during the same time frame, DSG staff was in the midst of engaging the public on updating the city’s residential development code,” according to the council’s agenda bill. “Trying to engage the public on a third major issue, the city’s operating and capital funding needs, at the same time was deemed to be too much for the community to digest.”

Now, Underwood is recommending that the city engage a group of 20 stakeholders on its financial challenges, including the possibility of going to voters with an operating and/or capital levy lid lift, and being ready in time for the Feb. 13 special election. That is when the Mercer Island School District will most likely seek the renewal of its four-year maintenance and operations levy, meaning costs can be shared.

City staff is worried about voter fatigue and recent tax increases for Island residents, including Sound Transit 3, the “McCleary fix” and King County’s Veterans and Human Services levy, which will go to voters in November. Corder said he is not counting on the fact that a property tax increase will be proposed or passed.

Information on the city’s operating and capital funding challenges, including council deliberations at various Planning Sessions and the work of the Council Operating Levy Committee and the Council Capital Levy Committee in 2016, is posted on the city’s website here.

All stakeholder group materials, public presentation materials and other useful materials (including a videotaped community meeting in October) will be posted to the city’s website in the fall.

The city will also send out a mailer in September and conduct a survey in October, according to the council’s agenda bill.

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