Mercer Island to develop fiscal sustainability plan

The plan will help the city address its projected multi-million dollar budget deficits.

The Mercer Island City Council is looking at multi-million dollar budget deficits in the coming years, and is aiming to come up with new strategies in the wake of the failure of Proposition 1, a property tax levy lid lift that would have raised enough revenue to maintain city services at current levels.

Even before Mercer Island voters rejected Prop 1 in November, the city council wanted to bring up its reserves and reduce deficit spending. It decided it needed to spend money to save money, enlisting a consultant to develop a “fiscal sustainability plan.” The council discussed the plan — expected to cost $54,900 — at its Dec. 18 meeting.

The plan was initially intended to help grow the city’s contingency fund (aka “Rainy Day Fund”) to equal a minimum of two-months of the annual general fund budget, as per recommended best practices.

Earlier this year, the city of Mercer Island hired the same third-party consultant, Management Partners, to review the methodology and assumptions built into the financial projections and forecasts used by the finance department, and they recommended the two-month benchmark.

The analysis also provided a basis for understanding the city’s financial ability to fund services during the next six years in the face of the looming budget deficits. Deputy Mayor Salim Nice said he expects the process to leave the city with long range planning tools, though he noted the plan won’t be sustainable until the six-year deficit goes away.

Management Partners is a professional management consulting firm specializing in helping local government leaders improve their operations for more than 20 years, identifying problems and best practices that reveal ways to increase organizational effectiveness.

Management Partners scope of work for developing a fiscal sustainability plan will identify budget strategies that, if implemented, would address the general fund’s annual structural deficit that was projected to rise to nearly $7.8 million by 2024, according to the council’s Dec. 18 agenda bill. At the meeting, Management Partners laid out its strategy and project timeline. A report is expected as early as April 30, 2019.

In preparing a fiscal sustainability plan, Management Partners proposes to identify budget strategies in several categories including revenue enhancements, expenditures controls and cost shifts, service delivery changes and service level reductions that, in combination, would serve to eliminate the general fund’s long-term fiscal gap.

In addition to the work proposed by Management Partners, the city manager and leadership team are working to identify an additional $1.2 million in reductions or new revenues to offset the $2 million in deficit spending in the 2019-2020 biennial budget. A draft proposal will be presented to at the 2019 council planning session Feb. 1-2, 2019. The outcomes will be incorporated into the analysis that will inform the fiscal sustainability plan.

See www.mercergov.org/CouncilMeetings for more.


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