Through what one council member called “extracurricular legal research,” Mercer Island found a way to reduce its projected budget deficits for the next biennium.

Councilmember Dan Grausz said he “earned [his] salary” by finding the city about $1.2 million through an “incorrect budgeting assumption” regarding the Criminal Justice Fund, which resulted in the city creating an extra reserve.

The state Legislature had removed a “non-supplanting” provision related to the criminal justice sales tax in 2010. This change, which was handled as a “housekeeping” measure, escaped the notice of both the Mercer Island Finance and Police departments.

“We believed we could not spend the money for normal police expenses so it was just accumulating until we could find a permitted use,” Grausz wrote in a December 2016 email update to Islanders.

The council was scheduled to discuss this budget matter at its March 20 meeting.

In the council’s agenda bill, Finance Director Chip Corder noted that folding the Criminal Justice Fund into the General Fund would give the city more flexibility in addressing the projected 2018 deficits.

The Criminal Justice Fund accounts for the criminal justice sales tax and its uses for specific Police Department costs, such as two hire ahead patrol officers, a police support officer and a school resource officer.

In December, the council passed a budget that projected a 2017 operating deficit of about $695,000 and a 2018 operating deficit of about $1.3 million, Grausz wrote.

At the Dec. 5 council meeting, Grausz requested that staff bring back a revised budget policy in early 2017 regarding the Criminal Justice Fund, and its application toward the 2018 deficit.

He said that the city’s adopted budget purported a hole that could only be met with new revenue, an expense reduction or the Contingency Fund, but that Criminal Justice Fund discovery confirmed that those were not the only options.

Closing the Criminal Justice Fund will free up $1.21 million of General Fund tax revenues in 2017 and 2018, which can be used to bridge the 2018 projected deficits of $505,195 in the General Fund and $343,886 in the Youth and Family Services Fund.

The balance of $362,179 could be used to bring the Contingency Fund, or “rainy day reserve,” up to its $2.94 million target level, provide additional funding for Interstate 90 loss of mobility litigation costs or address other one-time funding needs, according to the agenda bill.

Grausz wrote that he believes the city is “fine during this biennium as we have sufficient reserves in place and that is even without tapping our regular Contingency Fund.”