Tumwater’s fund balance expected to fall below minimum required amount by 2027

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By Jerome Tuaño

According to data projections prepared by Tumwater’s Chief Financial Officer, Troy Niemeyer, Tumwater’s fund balance is expected to fall below the minimum required balance by 2027.

The 2027 balance is expected to close at $3,327,624, three million less than the then required balance of $6,331,000.

Additionally, city expenditures are expected to exceed revenues in 2025, with expenditures of $34,368,000 and revenues of $34,357,000. The trend sees the gap widen over the following years.

City staff presented these data projections to City Council during the 2023-24 budget workshops. The actual data was shared with Shaking during an interview on September 28.

According to City Administrator John Doan, the minimum fund balance is equal to two months of reserve or 16% of the general fund. He said this amount is necessary to “properly manage the city and be in good financial health”.

Doan said they’ve identified several ways to avoid the trend. This includes changing the level of services, acquiring other sources of revenue, and increasing taxes or fees.

“It would be easy to [say] “Well, it’s 2027”… The thing is, the city’s finances are kind of like a supertanker – you can’t do a 90 degree turn. You have to spin the wheel and you make very slow shifts,” Doan said.

On top of their list of priorities for accomplishing such changes is the establishment of the regional fire authority [RFA]which would merge the Tumwater and Olympia fire departments and turn them into a new entity outside of the city government.

“The RFA is essential both to provide better emergency medical and fire service to our community, but also to reduce the rate of growth of city expenses,” Doan said at a council meeting. council on September 27.

Fire and emergency services have historically been the largest expenditures in Tumwater, with the town proposing to spend $20,399,539 on these services in 2023-24. Creating an RFA would likely also create a “fire protection charge,” which is a fee that cities claim is based on the expected cost of a structure’s fire response needs.

Another priority is to renew and review the structure of the Transportation Benefit District, which was created in 2014 to replace the city’s transportation funding. In 2015, the residents of Tumwater agreed to implement a 0.2% sales tax increase for ten years to fund street maintenance projects in the town.

In Washington State, annual increases in property tax collections on existing properties are limited to 1%. Doan said that also needs to be changed, but that requires it to be done at the state level.

He said other things that need to happen include a review of staffing needs and funding for the police department, which is the city’s second-biggest source of spending. The city must also make smart investments in infrastructure while ensuring real economic development. Doan said that means creating jobs, increasing the tax base and adding value to the community.

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