2012 Mid-Year Budget

For those who are interested, the mayor present a mid-year update to the council at the last meeting. The figures he presented are available here...  The bad news: despite the influx of some unexpected revenue, we are still running at at $59,000 deficit. The good news: the deficit is not as big as expected when the budget was approved at the end of last year.

Ruston Opposes Countywide Flood District

UPDATE, October 14, 2010: The News Tribune has an article on this issue today, which even includes a quote from our town attorney...
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Town officials joined several other jurisdictions today to testify against the county's proposal to make all of Pierce County a flood control district. There are several taxing options included in the proposal that Ruston argued against in front of the Boundary Review Board.

Town attorney Dave Britton gave this explanation:

Based on the unanimous resolution of the Town Council, I was directed by Mayor Hopkins to join city attorneys from several Pierce County jurisdictions, including Bonney Lake, Gig Harbor, Lakewood, University Place, Eatonville, Edgewood, Milton and Fircrest, in opposing the County's formation of a countywide flood control district that would include (and of course tax) all citizens of the county, including citizens of Ruston. The Town of Ruston is classified by FEMA as being in a "Flood Control Zone C", meaning there is virtually no risk of flooding here. Ruston residents already pay for their own surface water control, through updgrades to our storm sewers. Now, we are being told by the County that, in addition to paying for our own storm sewers (at no small expense to Town residents), we will also be force to pay for flood control for the three percent of County residents who have elected to live in the 100-year floodplain along the Puyallup, White, Carbon and Nisqually Rivers. In effect, the County if forming a special-purpose taxing district where 100% will pay, but only 3% will benefit.

While Pierce County has argued that it has not decided on which of several taxing alternatives it would use to finance its new flood control district, you can be sure the tax will not be voluntary. One of the tax alternatives available is a $0.50 tax on every $1000.00 of assessed value of property.

In a hearing before the Pierce County Boundary review Board today, the Town asked the Board to exercise its power to review the boundaries of the newly-formed special purpose districts to reject the County's proposed countywide flood control district, or to restrict its borders to a more logical service area (i.e., one in which the residents who benefit are also the residents who pay). Taxing the 97% of County residents who do not live on the 100-year floodplain, for the benefit of the 3% who do, is neither logical or fair.

Clerk Position May Be Eliminated

As noted in the last town newsletter, town leaders are leaning towards eliminating the clerk-treasurer position recently vacated by Karen Carlisle. The new accounting services through BIAS will cover budgeting and accounting, most of the building permit duties are now automated through the new building consultant and many of the duties for utility clerk will be automated with BIAS.

In addition, the council is considering a new "imaging" system that will put most of the town's documents on-line, saving time and effort on public information requests. The mayor noted after the last meeting there will be some upfront costs for these new services, but they will be more convenient for users and will be less costly in the long run. The talk is to promote the utility clerk to a new position that covers the remaining administrative work.

A final decision has not been made yet, but the 2010 budget is based on this new direction. The official budget that the council approved at their meeting last week is below. More details were discussed at the last study session (which I did not attend) and more action is expected at upcoming council meetings. Be sure to attend yourself and get a first-hand view of all the action.

Budget Cuts And/Or Tax Increases

I recently sent an email to Mayor Hopkins expressing my concerns about the proposal to raise utility taxes without making any budget cuts. Ruston has drawn on reserve funds to balance the budget this year.

Turns out the town has addressed both sides of this coin. His answer is informative and encouraging. He agreed I could share it with you'all. Contact information for all our elected officials is listed on the sidebar to the left. Be sure and keep the conversation going. It's important that our leaders don't make these important decisions in a vacuum. ~ Karen

This remains a balancing act and one that we haven’t been very good at in the past. We have made cuts and will continue to make them where needed. Some of the things council and I have done in the way of cost cutting – we eliminated the office assistant position, we eliminated the weekend emphasis patrol’s and have one officer on duty, we employed (prior to my time) a new town attorney whom is on retainer (huge savings) and replaced the town planning service with a more affordable service – much better quality/ service I might add. We are doing everything in our power to avoid litigation by being professional and diligent in our dealings with everyone. The litigation costs have been excessive and unacceptable – however this does not mean we are rolling over if we are confronted – it means we are handling our affairs properly and professionally.

We are not taking the increased taxation approach lightly. Council’s approach to this issue is that we cannot fundamentally run our town differently than other municipalities do. Meaning – we are in the condition we are in because we did not keep pace with the overall needs of the town. When this was a mill town we had subsidies and those offset our costs (need for taxes). Our tax position is quite a bit less than our neighbors in Tacoma and yet they have economies of scale working for them. For us to believe we can offer services for less than Tacoma is up for debate.

The other side of the coin is we have some residents that want the services, don’t want cuts, and are willing to pay more. They are probably a very small minority because I think everyone’s position is we don’t want services reduced and we don’t want increased taxes – that is the dilemma. Our projected expenses based on our 6 month review is approximately $900,000 (not including litigation payments) and our projected revenue based on our six month review is $790,000.

I am focused on encouraging growth, helping The Commencement come on line, promoting our town to anyone that will listen, helping Pt. Ruston become a reality, and the revenue will follow. Strong revenue growth will alleviate the need for increased taxation in the short term but at some point we have to adjust our tax base – but whether now is the right time or not is what council is currently dealing with.

Well – not sure if I have answered or properly addressed your issues but we have communicated. I know you are aware that I do not set policy so your council members will need to hear from you as well.

Ruston's Property Tax Revenues

Ruston's town clerk has verified the amount of tax revenue the town received from property taxes each year. I had asked for more details after my research posted a couple of days ago.

Here are totals:

• 2006: $154,857
• 2007: $165,560
• 2008: $168,991
• 2009: $200,000 anticipated

That's not much out of the $1.35 million dollar budget for 2009. More food for thought.

Karen

First Quarter Budget

The council reviewed the budget report for the first quarter of 2009 at the meeting last night. The full 40 page report is available at Ruston Reports. Below is the summary page. Overall, in the first 3 months we've spent 8.5% of what was budgeted for the year.

Did Ruston Miss The Boat?

A couple of people have commented this week that Ruston missed the boat by not getting any infrastructure projects on the list for federal stimulus money as reported the New Tribune on Sunday. At recent council meetings, Council Member Hedrick seems to know the most about the stimulus program, so I asked him and the mayor to confirm if Ruston ignored a call to submit a "wish list" and why the Town is moving in the direction they are. Here are their thoughts:
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From Mayor Hopkins:

Ruston never received any project calls and if we had we were unprepared to respond. I know Jim can respond to the Economic Recovery Plan better than I can but we are preparing our projects so they are ready as soon as possible should any money become available. I know you were at the last council meeting when our town engineer clearly stated that we need fully engineered projects with associated costs if we were going to be "Shovel Ready". We anticipate having our two projects "Shovel Ready" for possibly the next round of funds.

The Wall Street Journal lists where the first wave of the funds are projected to go and here is the Infrastructure breakdown:
Infrastructure
$32 billion Transportation projects
$31 billion Construction and repair of federal buildings and other public infrastructure
$19 billion Water projects
$10 billion Rail and mass transit projects

While the two year package is over $800 billion - $275 billion of that is tax relief and leaves $550 billion over two years. My point is the number seems massive until you start breaking it down and the odds of Ruston receiving any of it will be difficult. We are doing everything in our power to position Ruston so we are ready for any part of that money once it trickles down.

Both council and I have spent a tremendous amount of time exploring every avenue possible to help our town financially.
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From Council Member Hedrick:

I am not aware of any call directly to Ruston, however Governor Gregoire's office made a blanket call of municipalities and local governments to compile lists of infrastructure projects and submit them to her office by the beginning of January. Further, the Association of Washington Cities was coordinating an effort to have cities respond to the Governor's office. What that process has produced are lists of projects, shovel ready or not, of every damn dumb thing some mayor, or city councilmember, or county legislator or transit board member or port commissioner ever wanted to build. Historic barns, footbridges, dog fountains etc. This is in addition to local projects such as mixed-use developments, city parks, museums, performing art centers, monuments, etc.. These lists all sit neatly in a filing cabinet in Dick Thompson's office in Olympia with little to no chance of ever being funded by the economic stimulus package. (Dick Thompson is the advisor to Gov. Gregoire on the federal stimulus package).

As Bruce states above, and Mr. Morrisette explained in what I thought was a vey thorough and frank discussion about local infrastructure finance, the federal economic stimulus package is constructed in a rigid fashion and distributed by existing categories. Federal stimulus funding for sewer projects will be deposited directly into programs such as the public works trust fund where there is a list of prioritized projects that have been engineered and awaiting public funding, even before the notion of a federal stimulus package was conceived. Also, many of these projects I suspect may not even meet the definition of "shovel ready" (120 days) as prescribed by the Obama administration; but that's where the Feds are sending the money. There will be little to no role for state legislatures or local governments to appropriate any of the federal economic stimulus money. Further, the amount of federal funds that will be made available for local water/sewer infrastructure to each of the states is much lower than previously expected.

Not wanting to be divisive, but I think it's worth noting, that during the amount of time Ruston has no engineering services under contract prior to having Mr. Morrisette and his firm on board, Ruston may have lost its opportunity to be positioned in this infrastructure stimulus frenzy had we been able to give the sewer project assignment we commissioned at the last Council meeting to an engineer months ago. When our previous engineering firms services were terminated, Ruston had no firm arrangement for an immediate replacement. It's also fair to say there was not enough confidence among the Council in our engineer at the time to be given the sewer assignment. Regardless, Ruston may have submitted a list of infrastructure projects to Olympia and it would sit neatly in a filing cabinet. Ruston is not ready or even shovel ready with our sewer project and we are certainly not alone with other municipalities across the state.

I am with my Mayor, who I think is trying to get Ruston positioned to get state funding support from the public works trust fund and has explored other options. The federal economic stimulus package, which is more of a state government bail out package, is not a realistic option for Ruston at this particular point in history.

Over my morning coffee -
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Council Member Hedrick also shared this analysis of the federal stimulus package he did for a client recently:

Federal Economic Stimulus:
Long time Olympia stalwart Dick Thompson (former state OFM, DSHS, CTED director and Governor’s Chief of Staff) has been charged by Governor Gregoire to coordinate the state’s effort with the federal economic stimulus package. In discussions with Mr. Thompson it is becoming very clear there will be accountability in how Congress and the Obama administration will distribute federal stimulus funds to the states. The stimulus version recently passed by the U.S. House and the recently marked up version in the U.S. Senate has very tight restrictions on federal funds distributed in existing programs across the board. For example, Washington State will receive funds for K-12 education by program categories that are formula-driven such as Title I, Special Education, and school construction. Mr. Thompson observes that funding for Special Education children’s programs is certainly laudable, but it’s another matter to argue that it’s economic stimulus or creates jobs. Other unexpected issues in the federal stimulus package is that there is heavy restrictions on supplanting state funds with the federal stimulus funds. Meaning, states will not have the ability to use the federal stimulus funds to pay off the state programs for which they are intended and use state funds in those programs to backfill other state spending. Further, the transportation share for Washington and other states is much smaller than expectations. The entire federal package for Washington will only be about $550 million and of that half will be directly disbursed to local or regional transportation organizations.
The federal stimulus package acts much more like a government bail-out package rather than targeted economic stimulus. There is very little opportunity to target resources and serve strategic objectives. Back in Olympia, Legislative budget writers including Reps. Kelli Linville (D-Bellingham) new chair of the powerful House Ways & Means Committee acknowledge this week that the legislature will have very little if any role in determining how federal stimulus funds will be spent. Rep. Hans Dunshee (D-Snohomish) and chair of the House Capital Budget Committee observed, “Congress will get their stimulus program through without any pork barrel spending in it and the expectation will be no less for us here in Olympia.” The concept of accountability is not lost on state lawmakers as they closely monitor the other Washington and the way they have been directive with federal funds. It is clear the Obama administration, after watching the public outcry upon the Bush administration’s handling of the federal bail-out of the banking and auto industries, wants to be able to answer the question; where has the money gone? It has also become the perfect political cover for President Obama’s new tax cut proposal for the middle-class (those under $250,000 annual salary) without having to show how to pay for it.

The goal for Congress is to get the federal stimulus package to the President’s desk to sign into law by the President’s Day break in mid-February. Distribution of funds could then begin by the start of March, just in time for the state’s updated revenue and caseload forecasts.

Needed: $500,000 for 2009

At the last regular council meeting on December 3rd, town officials had a very compelling discussion of Ruston’s 2009 budget. Mayor Hopkins first week in office had him revise the budget down to the bare minimum. Even with deep cuts, Ruston’s 2009 projected revenue is $573,555 with expenses of $1,013,0789, about a $500,000 deficit.

In the mayor’s words, “We are struggling for answers to make sure that Ruston is viable moving forward (fiscally) and at the burn rate we have, I’ve calculated 5 years – at the very best we have 5 years.” He acknowledged that he and the council are facing some very tough decisions and need input from everyone.

The discussion was far ranging. Here is what I found interesting:

The mayor had not met with the town clerk yet. He wanted to hire an accountant to help him understand the budget as presented and suggest other ways the town might balance expenses and revenues; which Council Member Stebner supported. MRSC may be able to help as well.

The town attorney advised that the previous direction of the council prohibiting using the surplus property fund was only a “suggestion” and those funds could be used to balance the budget. No one wanted to do so, but agreed there is no choice.

Council Member Hunt presented a list of utility taxes that she suggested be imposed or raised on electricity, garbage, natural gas, cable TV, storm drains, telephone and sewer. She suggested a rate of 8% to 10% for each of these (about double or more of the current rate). She felt it was something that has to be done to survive. I’ve requested a copy of the specific proposal.

Hopkins proposed budget eliminates the full time police officer position and removed all police overtime. This is not realistic, but a place to start. Council Member Hedrick noted that 70% of the budget is salaries. If the town cuts the budget, that means they cut into employees. He felt Ruston could not tax and/or cut its way to a balanced budget, but the council could narrow the gap. Hopkins was to bring a new budget back to the council at their meeting last Monday, December 8th.

Feel free to send your ideas to Ruston’s elected officials (emails listed to the left on this page) or post a comment here. I’ll be sure and pass them along.

These are tough times for so many people. This struggle is not new to Ruston, although none of our current leaders even lived in town when the smelter shut down in 1985. Those were lean years, too. If we pull together, I know from experience we can survive and emerge from this challenge a better community.

Karen

Study Session: June 23, 2008

Here are the highlights from tonight's meeting, which lasted about an hour. There was a lot of discussion that covered many issues, but not very concisely (which is the point of a study session). I'll highlight what I heard by issue.

As always, I encourage you to attend so you can hear the full discussion yourself. These are very important issues that our elected leaders need to hear from us on. Please contact them outside of a meeting (public comment is not allowed at meetings until after voting is done). Emails and phone numbers are listed to the right. ~ Karen

General: Council Member Hunt summarized the revenue issues as a need to look at every tax, see if we are at the max (maximum rate allowed by law) and if not, to charge it. She also noted some ideas for addressing infrastructure needs that she learned at a recent conference, such as low interest loans for major projects like the sewer repairs. Rates would be increased to cover the cost for repaying the loan.

Gambling Tax: Council Member Albertson had not been able to find anyone with as low a gambling tax rate as Ruston currently charges. He felt the Tribune's editorial on the issue was "ridiculous and absurd". Council Member Stebner wanted to move on this increase right away. The ordinance will be ready for the next regular council meeting on July 7th. The owner of the casino was in attendance (I think he had his attorney with him).

Hotel-Motel Tax: This tax can only be used for tourism, but Hunt pointed out there is a broad definition that allows use for things that attract tourists (like improved street lighting or pocket parks). The Point Ruston hotel is projected to bring in $388,000 to Ruston (not sure if this is annually). Albertson thought this tax was "riddled" and does not solve the current problem of revenue shortfalls. The council will continue discussion at a future study session.

New Sales Tax Rules: Council Member Huson is confused about how the new "point of sale" tax rules will impact Ruston's revenue. After some discussion, this issue will be researched and discussed again later.

Business Licence Income: Hunt pulled all the UBI numbers (state issued to all businesses) for Ruston from the state's web site. After she noted she had not reviewed all the details of this list (such as which numbers were still current) she said only 2 in 10 have business licenses in Ruston that should. The council wants the Department of Revenue to provide a current list so town office staff can enforce this requirement on everyone. The clerk expressed concern about having enough time.

A business license currently costs $40 in Ruston. Albertson noted he pays at least $100 to Tacoma for his business. It appears the council is ready to raise the rate substantially, but will discuss it further at another study session.

B&O Taxes: Albertson noted some are promoting a very irresponsible notion of doing away with this tax. He is astounded that we are not maximising this tax instead (currently Ruston charges less than Tacoma). Not all businesses are paying the tax that should be according to Hunt's research. The clerk pointed out that businesses must make $5,000 per quarter before they pay any of this tax. After more discussion, the council appears ready to raise the rate to "comparable rates for surrounding communities", but will discuss it again at a future study session.

Leasehold Excise Tax: This tax is paid by tenants in the school building and passed directly to the state. Ruston may get a small portion back, but no one was sure how much, if any. The council wants The Commencement Group to pay more. Hedrick pointed out that the rate is based on the value of the lease (which is $0), but the town currently collects from them for the use of the sales center. Hunt also wants to require them to pay for 50% of all maintenance and improvement costs for the building as required by state law. The issue will be discussed again at a later study session.

Police Interlocal Agreement for Major Incidents: The council appears ready to approve this agreement.

Financial Report Commentary

For a short report, this one packed a lot of meat. Others will see different issues, but here are some points that I found interesting:

• The main point is we need the Point Ruston development to survive. From the report: “Simply stated, it does not appear that Ruston is financially viable without the Pt. Ruston development.” That means we should be doing everything we can to make this happen NOW – not throwing up roadblock after roadblock. I know we need to find balance and be reasonable, but that’s just the point; let’s get reasonable. Right now the Town is making the process too costly and taking way too long.
• The Current Expense Fund is loosing money annually. Just a note, utility funds pay for themselves from user fees, the majority of the rest of town services are budgeted out of the Current Expense Fund. Right now, about 32% of that fund comes from property tax, which has a voter-approved growth limit of 1%. Local inflation is at about 4.5%. Not a good combination. We gain a bit from new construction, but until both the Commencement and Point Ruston developments are built out, this fund is not self-sustaining. The good news is that once those developments come on-line, we cross that threshold without tax increases (at current service levels).
• Administrative functions (both people and facilities) are currently stressed. We had a wonderful opportunity to build a new town hall facility at the school, but it has gotten lost in the squabble between the mayor and the council. Maintaining our current staff, with their institutional knowledge, is vital. Yet the non-uniform staff just unionized. I think that’s because they don’t feel they are being treated fairly and valued. Again, not a good combination at a critical time. This appears to be yet another point in the mayor/council squabble.
• It didn’t look like the report considered the positive impact of the Stack Hill development, unless it part of the ‘construction’ growth. That would bring needed tax dollars sooner than Phase 1 of the Point Ruston development.
• It doesn’t look like the study author had read the fire committee report. The fire committee addressed his concerns about emergency medical/ fire services and needed growth (and financing of that growth). Police services need to be analyzed, but we moved to 24-hour coverage in the last few years. That’s a big step (and costly) that has already been made.
• The study notes that periods of growth for municipalities require some up-front costs that are recouped after the growth has slowed. For instance, new infrastructure cost hit but are paid over time with increased property values. Ruston currently has no debt, but there is proven business wisdom to use debt to maximize growth periods. The report outlines some great financial polices, including some for using debt to our advantage.
• One of the revenue sources the report discusses is increasing the tax for our current small businesses. Our current businesses operate on a shoestring as it is. We need to encourage them, help them grow as a way to increase our tax revenue, not throw an additional tax burden on them.
• One final note – I can’t believe we still haven’t figured out how to use the Harbor Improvement Funds. The question has been around the 20 years I’ve been watching – let’s get moving on that one!

Those are my initial thoughts. What do you think? ~ Karen