The Cost of City of Edmonds Services

The following article was provided by Shawn Hunstock, finance director for the City of Edmonds.

The City of Edmonds provides a number of mandated and non-mandated services to residents, businesses and visitors.

A “mandated” city service is generally one that any incorporated city within the state is required to provide its residents. This typically includes police, fire, emergency medical response, finance, city clerk and court functions, land use, building, and public works services.

Cities also provide a number of other services to enhance the quality of life of its residents. These include providing parks and open spaces, recreational  programs, social  services, community and economic development services, as well as a vast array of capital investments in transportation infrastructure to maintain and improve City streets.

Overall Cost of City Services

In the City’s General Fund, salaries and benefits comprised 51.8% of actual expenditures for 2011. This figure does not tell the full story however, because the City has a contract for services with Snohomish County Fire District #1 of just over $6.2 million for fire and emergency medical services.

A large portion of that contract also goes to pay for salaries and benefits for employees of the Fire District. For 2009, the last year the City of Edmonds had its own fire department, salaries and wages comprised 70.6% of the General Fund budget.

The high percentage of General Fund budget comprising salaries and benefits is one of the primary reasons expenditures are projected to grow by approximately 3.2% per year in the future.

With revenue projected to grow at a slower pace, this means the projected deficit of approximately $1.1 million in 2013 will grow each year. If current projections actually occur, City reserves could be depleted by 2016 unless expenditures are reduced, revenues are increased, or a combination of the two occurs.

The first attached table shows actual expenditures for the General Fund by department in 2011.

Every department but one was under budget for the year. The Finance and Information Services department was over budget primarily due to increased audit costs in 2011 for conducting the 2010 audit, as well as the need to bring in a contractor to act as Finance Director for several months during the year.

Most departments were significantly under budget with total expenses being 3.7% less than budget.

The amended budget for 2011 anticipated a decrease of $737,621 in fund balance in the General Fund. However, the City was able to increase fund balance by $780,623, primarily due to efforts made by department heads, City administration and City Council to reduce spending in response to declining revenue.

The City has been successful in ending the last three years (2009-2011) with a surplus in the General Fund despite declining revenue in each of those years. The City accomplished this by implementing both short-term and permanent cost cutting measures.

City of Edmonds 2013 Budget

The City previously undertook many different cost cutting measures as the economy declined in recent years. Several  non-mandated services  were  reduced or eliminated in the past, such as the School Resource Officer program in the Police department.

In response to a projected deficit of $1.1 million for 2013, the City will look at all services provided. This review will include both mandated services, such as public safety and public works, as well as non-mandated services.

Department heads, the Mayor and City Council will all be addressing the projected deficit and other issues facing the City during development of the 2013 budget.

That process will begin this summer and residents will have the opportunity to provide feedback about the City’s budget during public hearings prior to a new budget being adopted this fall.

Looking Forward

As previously mentioned, updated projections for 2013 anticipate a deficit for that year of $1.1 million. As shown in the second attached graph, the revised projections also show the City’s reserves being depleted in 2015.

The City will begin to address the long-term issue of expenditures rising faster than revenue during the 2013 budgeting process.

This will more than likely be a multi-year process that is addressed in a number of ways through a combination of expenditure reductions, revenue increases and use of City reserves.