With concerns about imprecise financial forecasting and voter fatigue, the Mercer Island City Council is poised to reject City Manager Julie Underwood’s recommendation to put a six-year levy lid lift on the November ballot for city operations.
A smaller property tax increase is still on the table. The council rescheduled its public hearing from its June 19 meeting to July 10 to continue the discussion.
The city is projecting multimillion dollar deficits in the next biennium — and $7.89 million over the coming six-year period — without new revenue, or it may have to cut parks maintenance, Summer Celebration, senior services and other programs, according to the council’s agenda bill.
Underwood’s plan — a levy that would cost the average homeowner $265 in 2019 with incremental increases until 2024 — would maintain funding for city services at their current levels. But a majority of council members “wouldn’t support a levy of that magnitude,” said Tom Acker, who was elected to the council last fall.
One of Acker’s campaign promises was to continue funding the Youth and Family Services (YFS) mental health counseling program. There are seven YFS counselors in Mercer Island schools, but they are city employees. The city also offers other counseling services at the YFS office in Luther Burbank Park.
Acker said he would support a stand-alone levy to fund the counselors. Council member Dave Wisenteiner suggested a small levy for the counselors and a Thrift Shop expansion project.
Proceeds from the shop go to YFS, and if revenues increased, YFS could become financially self-sustaining, Wisenteiner said. His plan would also include cost containment and using some one-time money.
Mayor Debbie Bertlin and Council members Bruce Bassett and Benson Wong seemed to support a “community safety net levy” for items like the counselors and other YFS programs, a school resource officer, emergency planning and other potential items. Council member Wendy Weiker said she would support a “micro-levy.”
Deputy Mayor Salim Nice believes that the 2019-2020 budget can be balanced using one-time funds, and said he would not support any levy because he didn’t want to prematurely “pick the winners and the losers.”
Bassett and Wong argued that using one-time money is financially irresponsible, with Bassett warning that the city will face a “fiscal cliff” in 2020, and may have to go to voters with an even larger levy lid lift in the future.
Islander Leslie Meagley, who served on Underwood’s budget Community Advisory Group (CAG) and supported the majority recommendation to place a six-year levy on the November 2018 ballot, said that a smaller levy is “a compromise that doesn’t solve the long-term structural imbalance issues.”
“[The small levy] preserves important programs and allows the city more time to do a deeper dive into its finances,” she told the Reporter. “But it’s not about creating winners and losers. It’s about keeping Mercer Island as the kind of community we value.”
Acker said that the council needs more data and should wait to go to voters until 2019, stating that the city would “lose credibility” if it puts a levy on the ballot that fails. An opposition group, Mercer Islanders for Sustainable Spending, has already formed to resist a potential levy.
Former City Council member Mike Cero, who is heading up the group, told the Reporter that a levy is not necessary because “the city has enough money to address the forecasted 2019-20 budget deficits” and “the consistently unreliable forecasts will minimize the forecasted 2021 so-called ‘cliff.’”
“Islanders can see through the so-called ‘counselor-only’ or ‘Community Safety Net’ levy proposals as freeing up money in the general fund for other less important projects or services,” he wrote in an email. “Additional improvements are obtainable with a 2-5 percent efficiency improvement and an updated interpretation of REET funds for maintenance as legislated in 2011 and 2015.”
Meagley noted that the city may need to restructure its finances and services in the future.
Underwood said that property tax, whic is the city’s main revenue source, is “not sustainable.” The city will look at other models in the coming years, but that it has “to bridge the gap first.” She also proposed other revenue sources — such as an increase to the B and O tax — along with an organizational effectiveness review.
“It’s our job to exercise fiscal prudence and fiscal responsibility, and I frankly love the fact that we’re in a position to tee up, just as the city manager has, to our public what we believe to be fiscally prudent proposal, and let the public decide,” Bassett said.
The city manager seemed to agree.
“Ultimately I believe our community should decide,” Underwood said.
See www.mercergov.org/FinancialChallenges for more.