Read: Mayor Mike Nelson's 2021 Proposed Budget Address
(Click here to watch the recorded speech. It is 17 minutes long)
I stand before you today to present to you the 2021 City of Edmonds Proposed Budget.
It is important to note that this budget was prepared during an unprecedented global pandemic in which a deadly virus is still infecting our city, our country and our world. As we have seen recently, No one is safe from this virus.
At the time of these remarks, 35 million have been infected, resulting in the deaths of over 1 million people. It acknowledges the extreme measures taken by our City government to protect public health, maintain critical government services, and along the way, come up with creative ways to keep our community safe and sane.
We lost a part of us this year. We lost loved ones, we lost our ability to be physically close, to share the same common space, common events.
But we did not lose our humanity.
We gained an appreciation of what really matters our family and our community.
In March, I declared a local of state of emergency and issued an emergency order making Edmonds one of the first cities in WA to lockdown to help keep our residents safe. Shortly thereafter, the Governor issued his stay-at-home order locking down the entire State. All public access to city government buildings remain closed, most businesses face severe access restriction and large gatherings and events of all kinds are prohibited.
However, most city government services remain available and accessible thru the internet or by phone. Due to specific continuity of government safety measures we implemented during this emergency, there has been no interruption of critical services to date in any City department.
Spending Reductions in Response to COVID-19
My term as mayor began with a budget from the previous administration that had more in expenditures than revenue projected to come in.
A $5.2 million dollar deficit.
Then COVID hit.
By May, we were forecasting the possibility of an additional $4 million revenue loss.
The biggest single effect COVID could have on Edmonds revenues would be a direct hit to Sales Tax revenue. Initially many governments were predicting to lose more than 25% of their sales tax revenues. At the end of May we presented a forecast to Council that said we could lose as much as $4 million in revenue from the general fund in 2020.
In addition, when I took office, our Amended Budget had revenues of $43.8 million versus expenses of $49.0 million, or a $5.2 million deficit. This is clearly not sustainable, especially in a recession. With an estimated fund balance in the General Fund at the end of the year of $14.6 million, in three years our fund balance would be gone.
Faced with these projections and the uncertainty of COVID, we cut $4.5 million in expenditures from the 2020 general fund. Like most cities, we froze hiring, put off starting big projects, and cut travel and professional services.
Projected Revenues Now Improving
We took significant steps to help our local community get through this crisis. Early on we provided an infusion of city funds to help those most vulnerable including our seniors, the Food Bank and local small businesses devastated by the closures. When we received $1.2 million in Federal CARES Act funding, we recommended and received Council authorization and support to dedicate $1 million of this money to directly help local businesses and individuals in need. In the midst of this pandemic our citizens stepped up, did what they had to do to get through this and supported our community as best as they could.
I am proud to say
We are now seeing those results.
Sales Tax Revenue
For the 9 months ending in September, we have already collected $5.92 million in sales tax. Last year we had collected $6.28 million. We are down $360,000 more than at this time last year.
In fact, our City brought in 3.7% more sales tax revenue in the month of September than during the same time period last year. For the month of September only, we collected $736,091 in 2020 compared to $709,684 during September 2019.
Property Tax Revenue
We are now expecting a small increase in property tax revenue in 2021 due to new construction.
In light of this and the sacrifices by our residents, we are not asking Council to increase Property Taxes this year, as allowed by law.
Another important contributor to the City is Real Estate Excise Tax money. For the 9 months ending in September, we are only down $77,501.
Our efforts to support small businesses with targeted city funds, allocating over $1 million of CARES grants to 90 small businesses, closing Main Street to make it more walkable and safe to shop, and quickly enabling outdoor street dining are making a real difference.
Our current estimate now is that the City will lose $1.99 million in revenue in 2020, not $4 million as earlier estimated.
Our calculations our in line with similar projections recently released by the State Office of Financial Management. In June, the State of Washington had forecast an $8.8 billion reduction in revenues. Last week they cut that forecast in half, to $4.2 billion.
2021 Budget Highlights
Our intention has been to cut as much as we reasonably could out of the budget, so that we would be prepared for the worst. For 2021, we cut an additional $3.2 million requested to be spent by departments from the general fund.
The improving financial trends over the last few months indicate that we have learned how to live with COVID, with masks, social distancing, temperature checks, and other measures. Another big contributor is the series of stimulus bills passed by Congress.
We have prepared a budget for 2021 assuming that the recession will continue, but will not be as bad as predicted originally.
COVID provides us real opportunity to refocus our efforts on community connections.
Those that are struggling and our most vulnerable.
An opportunity to refocus on staying local rediscovering our parks, our businesses, and more walkable neighborhoods.
That is why I am proposing the following:
Humans Services Program
Create a new Human Services Program with a budget of $500,000 that would include a full-time social worker. Unlike all other cities in the region, our city has never had a human services program. It is time we did. This will help those our seniors, those who are housing unstable and unsheltered, and prevent those from becoming homeless.
Highway 99 Investments
Continue Highway 99 Gateway Project approved in 2020 to design and install a raised center median along the 2 mile corridor, new pedestrian crossing to improve traffic safety and spur redevelopment.
New Community Renewal Plan on Hwy 99 to set the stage for future redevelopment of properties along Highway 99, especially in some southern parts of the Corridor where problems of crime, graffiti, nuisances, code violations and general disinvestment persist.
Some areas do not feel as safe and attractive for people, we hear you and we are addressing that.
A Community Renewal Plan for these areas can offer strategies and short-term actions to address concerns where needed.
Equity and Diversity
Creating City Diversity Training for all staff and board and commissioners
Funding to Update our City’s most important planning document, City’s Comprehensive Plans to include racial equity. We need to ensure our city programs and services reach all populations. This city-wide approach will work closely with residents to ensure planning and activities meet the needs of underserved communities.
Equity /Inclusion Arts Grant Funds
-The cancelation of programs and events from COVID has had a severe negative impact on nonprofit arts organizations and artists. Over the years we as a City have supported a variety of arts programs and conferences. This year we will creating New Arts Grant Fund to inspire and support projects that emerge from these challenging times that focus on equity and inclusion. Grants of up to $10,000 each
Our Equity and Justice Task Force has been diligently working on recommendations but will not be ready until after this budget. --making decisions thru equity lens
Police Body Cam Project We have already begun a pilot project, and some officers are being trained and outfitted. There is currently no cost to the city but we will coming back at the beginning of the year to request funding one we have completed this analysis and testing period of needed equipment and staffing.
Pedestrian Safety Improvements
Citywide Pedestrian Improvements of $2.2 million as well as expansion and maintenance of Sidewalk program
New Salmon Safe Certification Program
We are seeing significant decline of our resident orcas and massive decline of chinook salmon in the Puget sound.
Every coastal city plays an important role in saving orcas and salmon. This program will provide an In-depth assessment of our city policies, plans, operations that impact water quality and habitat of our watershed and Puget Sound. It will include recommendations for improving environmental conditions and watershed health over next 5 years.
New Park Land Acquisition Fund
This would create a permeant open space fund that would grow every year. The fund will start with $500,000.
We need re-imagine the role of our public lands as the solution they can be for building a more sustainable world.
Every 30 seconds, the United States loses 100 yards worth of forest, grassland, and other natural places to sprawl, energy infrastructure and other development
New updates to our Comprehensive Plan to address climate crisis and our Marsh. And yes it is a climate crisis, not climate change.
Change sounds like you are talking about the weather today, not the destruction of oceans, forests, snowpack, more droughts, catastrophic fires, 100 year floods that are actually happening every year.
We need to better plan, prepare, and reduce these impacts
Edmonds Marsh Restoration $450,000
Facilities Maintenance $532,000
Major Capitol Projects
Civic Field $6.2 million
The largest capitol project every in our city to replace our aging and out of state compliance wastewater treatment plant with a greener Wastewater Carbon Recovery Project $22 million
Some outstanding issues to Flag
South County Fire Labor contract
I-976- Potential loss of $700,000 annually to the Street Repair fund due to I-976 is also an important consideration we have to be ready for.
I would like to thank our City Council for sharing their important input from their retreat. We found alignment in many areas and attempted to incorporate many of their priorities. Unfortunately, not all could be met in our current economic climate but we look forward to working with Council and revisiting them as things continue to improve.
If the economy rebounds better than our forecast, we have budget requests that we will then be able to consider putting into the budget as amendments in 2021.
I greatly appreciate the significant efforts and sacrifices made by city staff during this time and in preparation for this budget.
No training or experience could have prepared you for this and you have gave your all to our city. I am forever grateful and appreciative for your commitment and your professionalism in helping keep our city running.
I especially want to thank our Finance Department for their guidance and dedication during this unpresented time where manuals for managing city finances during a pandemic have yet to be written.
Revenue Improving but Cautious about Future
There are still many unknowns including pace of economic recovery as we head into winter, the potential resurgence of the virus, a realistic timeline of a vaccine and it’s distribution.
Past economic recessions are a poor indicator and predictor because their root causes where derived from an imbalance in the economy, not from a pandemic.
This virus and everyone of your and our actions will help decide the future health of our community and our local economy.
We have seen when we wear masks and social distance, the virus drops significantly, when we let our guard down and fail to take regular precautions, it comes back with a vengeance.
Our budget accounts for the uncertainty that COVID lays before us.
But it does not shy away from the real opportunities that lay ahead to shape our city to be more resilient, healthier, safer, and welcoming for all.
I want to conclude my remarks with this final thought.
Our American way of life is being tested.
Our values are being tested.
What we value, Who we value
the fabric that holds us together is being pulled and stretched farther than we ever imagined.
Over 30 years ago, a professor and author Samuel P Huntington wrote that
“A gap has always existed between the ideals in which Americans believed and the institutions that embodies this practice…
“Being humans, Americans have never been able to live up to their ideals, being Americans they also have been unable to abandon them.”
This virus has Exposed our vulnerabilities as a society, our social and economic inequities, racism and the climate crisis.
It has exposed deep wounds that were never healed.
Our little city alone cannot close this gap, but we can sure try.
We will not abandon those in need.
We will not be silent to those who have endured racial injustices.
We will not let our environment be destroyed.
We will have a strong economy.
We will have a safe community.
Our future may be uncertain, but our commitment to each other is not.
You have shown that Edmonds.
You have shown we will get through this pandemic and economic uncertainty by looking out for each other.
This is the way.
This is the Edmonds way.