Mercer Island City Hall. File photo

Mercer Island City Hall. File photo

City’s financial crisis a major topic going into the new year

Mercer Island council planning session included budgeting, fiscal planning discussion.

City officials say the still-looming Mercer Island financial crisis is a key point of focus going into 2020. It’s a time to evaluate, assess and reflect.

The newly seated city council and city staff had a busy weekend as the annual city council planning session took place on Jan. 24 and Jan. 25. One of the key talking points was the city’s financial situation and budgeting strategies. A discussion on fiscal sustainability and long-term finance was to be led by finance consultant Mike Bailey on Jan. 25, after the Reporter’s deadline.

It’s been just more than a year since deep cuts were made to the city’s budget and several beloved community traditions, including Summer Celebration, were eliminated. The deep reductions of city services and events were due to insufficient funding, projected long term deficits, and the failure of Proposition 1 — a levy lid lift that would have generated funds to maintain then-current levels of city services.

That measure failed in the November 2018 general election and subsequently the city made further cuts to balance the budget. Additionally, with the passing of the final 2019-2020 biennium budget, the city council also directed staff to trim city spending by an additional $1.2 million in order to lessen the impact of a long-term deficit projected to reach more than $4 million by late 2020.

As a result, many cuts were made. Positions were eliminated or left vacant, hours of services were reduced, and events were canceled. The majority of deeper cuts were felt in the Parks and Recreation Department.

Still, major deficits are predicted in future years and more changes will have to be made. The financial crisis situation is ongoing and officials say the city is working on evaluating and assessing its services and looking for ways to increase efficiency and revenues.

Ross Freeman, city communications manager, said the financial crisis the city still faces is a prime topic for the new city council, and much discussion devoted to the subject is expected to take place at upcoming council meetings.

Interim city manager Jessi Bon, who was appointed in June 2019, said that while the city is facing the challenge, it’s also a good opportunity to re-evaluate and complete organizational assessments.

“This organization (the city) is at a place in our life cycle where it’s time to take a comprehensive look at our service levels, and there’s both opportunity and risk when you do that,” she said. “We have an opportunity to move forward with a solid foundation and stronger policies. But when you make changes there’s risk of losing some things along the way.”

Right now the city is looking at how it performs its services and researching what other cities do globally, she said.

“We’re still evaluating these things. It’s not just about containing costs but also about evaluating efficiencies,” Bon said. “It’s time to narrow the city’s focus, looking at the city’s priorities and making sure they are aligning with the community’s priorities.”

Bon said the city is still facing a structural imbalance with expenditures exceeding revenues and needs to focus on not just short term but also long term financial planning. There is still a projected long term deficit, and more cuts could be in the city’s future.

What they are looking at now is longer term service level standards and revenues and how they use them, she said. They will be pondering solutions to close the projected gap.

The solution is not yet determined. Bon said various ideas for revenue sources will be considered, and another proposed levy lift is not outside the realm of possibility.

“This is a top priority for council and staff this year as we work on the 2021-2022 budget,” Bon said. “The council will consider a variety of revenue-generating alternatives as part of our work this year and next year as well.”

She said some cultural changes have taken place on the Island and will likely continue as the community adjusts to structural city changes.

“We’re going to be gaining some things but losing some things on the way. That’s kind of the season we’re in,” Bon said.

She also commended community members who stepped up in the wake of city event cancellations. Summer Celebration, which ran for some 20 years, is no more. But now, for the city’s 60th anniversary celebration, a community group is planning a special summer event called MercerFest.

Similarly, the Mercerdale Lights and Firehouse Munch this year was a great success, she said, thanks to the efforts and monetary donations of community members. She said the Fire Union played a significant role in that event as well, and the traditional chili feed was packed.

When asked if this is how the city will continue to operate, whether the recent changes are temporary, if more can be expected, or if some reductions will be undone, Bon said she didn’t know.

“It’s too soon to know the new normal,” she said. The city is working on solutions, Bon added. “We want to make sure we are efficiently stewarding tax payer dollars.”

She said she anticipates in the springtime there will be a focus on capital planning with major projects and how they are funded and prioritized. Then in the fall the city will be working on the the general fund, which is how the city primarily operates.

Bone said she sees possibility for growth and the city will continue to evaluate budget policies and opportunities to amend or update them and in some cases perhaps prepare new budget policies.

“I am an optimist. For me it’s not a negative or a positive right now. It’s an opportunity to better the organization,” she said.

With the three new councilmembers, there’s likely going to be new ideas brought to the table, Bon said.

“I’m not sure as a whole council where they will be, but I do expect some change with new positions and new ideas,” she said.

She also said it’s important to remember that Mercer Island is not unique in this situation.

“We’re not the only city with a financial challenge right now,” Bon said. “There are many cities with a structural imbalance.”

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