Olympia City Council will vote on its 2021 budget this week. Here’s what’s in it
Olympia’s City Council will vote on a final package of amendments to its 2021 budget on Tuesday.
Over the past several months, increasingly optimistic projections for tax revenues have narrowed a feared, COVID-fueled general fund shortfall for next year from $10.5 million down to $1.3 million.
Each year, the preliminary operating budget estimates future revenue based on the previous year’s revenue. Back in May, shortly after COVID-19 shut down the economy, the picture looked bleak. Since then, that number has been revised down to $6.75 million in September, and by the end of November it was down to $3.5 million. In a presentation given to council last week, it was down to $1.3 million.
As City Manager Jay Burney explained to council on Tuesday, the improving tax numbers mean that 2021’s budget can avoid the severity of cuts that were made to the 2020 budget earlier last summer.
The city adjusts its budget in real time throughout the year. Over the summer, as the worldwide pandemic upended municipal budgets across the United States, Olympia cut $5.5 million in expenses through a combination of hiring freezes, furloughs, and not hiring seasonal workers. Burney said he asked every city department to cut 5% from their budget.
Along with some federal CARES Act funding, those cuts ended up being more than enough to close the city’s 2020 $3.5 million revenue gap (the decrease in the actual amount of tax revenue collected from what was expected).
Part of the reason for the more optimistic projections is property taxes, which have remained stable even while the city’s other primary revenue — sales taxes (down 2%), and business and occupation taxes (down 5%) — took a hit in 2020.
Looking forward, Burney says the 2021 budget takes a cautious approach, even with revenues rebounding. “We’ve assumed that 2021 is going to be better [than 2020], but there’s still some uncertainty there.”
Burney’s preliminary operating budget for 2021 proposes $167.7 million in spending. The general fund, which covers the city’s core functions — transportation, police, fire, and parks — is $87.9 million. While that number is higher than last year’s operating budget, it’s only because certain costs outside the city’s control go up every year, such as guaranteed employee benefits and salary increases, as well as liability and property insurance for city assets.
In terms of the city’s controllable, discretionary spending – which comes from the general fund – that’s been reduced by $1.4 million when compared to last year’s proposed general fund budget. That includes things such as employee training and travel, office supplies/materials, and leaving nine open positions vacant for first six months of 2021.
Plugging revenue gaps
The city’s 2021 budget plans for a $2.7 million shortfall, meaning that’s how much expenditures will exceed projected revenue. To fill that, the city will tap $1.3 million from its Budget Stabilization Reserve (BSR), a $7.7 million pot of money established in 2019 and set aside for fiscal emergencies such as this one.
The city could fill the shortfall entirely with stabilization funds and still have $5 million left. However, with the future recovery timeline unclear, Burney thinks it’s more prudent to save some of that reserve for later.
“The more I use now, the less I have available if things get even worse,” Burney said. “Let’s say 2021 is way worse than we predicted, we may have to use more budget stabilization reserve. So rather than use it all now, I’d rather be conservative and make some temporary expenditure reductions and get through 2021.”
Council can amend the budget at any time. Burney said the council plans to re-assess the budget after the first quarter of 2021.
“Hopefully by the end of 2021 we’re starting to see the economy fully rebound and we can make different decisions to restore some of those cuts as we move into 2022.”
Last-minute balancing
Last week, the council approved Burney’s recommendation to add $746,500 of additional spending into next year’s budget.
Tuesday’s vote put in an additional $225,000 to bring on members of the Crisis Response Unit (CRU) as city employees (right now they are contractors), $135,000 for a cost-of-living adjustment for city employees, and $150,000 to hire consultants to work with the city’s new committee tasked with “re-imagining public safety” as well as implement new legal protections for tenants.
It also includes $207,000 for the Olympia Police Department (OPD) to send officers to attend trainings mandated by the state’s new I-940 law, as well as for 29 officers to do Crisis Intervention Training (CIT). The city previously provided funding for CIT training in 2016, but 29 officers have been hired since then who have not been trained.
The lone voice of opposition to Tuesday’s additions came from council member Renata Rollins, who said she supports the training initiatives but objects to giving more money to OPD to carry them out.
“It’s hard to support an increase in the police budget even though it’s for things like training and increasing services that we like, like the CRU. I just think that with everything we heard this year, I’m really surprised that there wasn’t at least a way to do that in a budget neutral way within the police department and I just think it would be within the administrators’ ability to do that,” Rollins said.
Olympia’s 2021 budget allocates $21.6 million to the police department, 24% of the city’s general fund expenditures.
It also includes $270,000 to hire an equity and inclusion manager and compensate citizens who serve on the city’s new Social Justice & Equity Advisory Commission.
Council member Jim Cooper said he was glad the city “took a breath” and took time to listen before making cuts to the police budget.
“The pressure to defund our police department without an idea behind it, the governments we’ve watched try to do that in real time and fail, I’m really excited that Olympia took a breath to listen and take some time to work with the community over the next year to dial in,” he said.
Rollins disagreed that asking for austerity from OPD now would be premature.
“I don’t think we are asking for a defunding without anything for it to go to. We have these things like the CRU (Crisis Response Unit),” Rollins said.
“It doesn’t send the right message,” Rollins added. “It doesn’t look like we’re serious about taking a transformative look at our public safety if we’re just kind of going along with the same pattern that’s been identified in communities across the nation of continuous increases, even while a lot of other departments have been asked to make sacrifices.”
This story was originally published December 6, 2020 at 5:45 AM.
.jpg)