The Lynnwood City Council Monday night began its annual review of the city’s 2021-22 biennium budget.
During its Nov. 1 work session, Lynnwood Finance Director Michelle Meyer briefed the council on proposed amendments to the budget. The review process will last through mid-December, when the council will vote to approve the changes.
The budget was adopted November 2020 after months of belt tightening from city departments as a cost-cutting measure in response to the economic impacts of the COVID-19 pandemic.
“The focus of the budget was to really try to be conservative because we were — and still are — in the midst of the COVID pandemic and dealing with the uncertainty of what that would mean for (city) revenues,” Meyer said. “We’re continuing that conservative mindset as we do this mid- biennium review.”
First, Meyer proposed increasing the city’s sales tax revenue budget by about $733,000 to pay for staffing positions currently funded through the American Rescue Plan Act (ARPA). Earlier this year, the council voted to use $656,000 in federal pandemic relief dollars to fund 8.2 full-time equivalent city positions through 2021. Next year, those positions will be paid for through the city’s general fund. An increase of $77,000 will also be requested to fund the current city clerk/procurement staffing through the rest of the biennium.
Additionally, the city received a $8,400 grant that will be used by the city’s Parks, Recreation and Cultural Arts Department to create a comic book to teach kids about Lynnwood’s history. The funds will be added to the general fund.
Meyer also said there is $183,059 from 2020 that needs to be carried over to complete and pay for contracts that were approved in 2020 but not completed by the end of the fiscal year.
Next, Meyer explained that the city received a one-time $162,000 state grant to offset costs generated by new law enforcement- and criminal justice-related legislation and the budget would need to be amended to reflect that. The grant will be included under the city’s criminal justice fund, she said.
A new fund was added to the budget to reflect the $10.9 million in American Rescue Plan Act (ARPA) Lynnwood received from the federal government. The federal relief dollars will be paid in two installments over two years. So far, the council has authorized $882,000 to fill city staff vacancies, fund technology upgrades to stream public meetings online and purchase police-worn body cameras.
Staff is proposing changing the way it shifts funds to pay for rental equipment. Currently, the city maintains a reserve fund and an operating fund for equipment rental. Each year, a transfer is made from the reserve fund to the operating fund. Now, staff are requesting a one-time transfer of $975,000 from the reserve fund to the operating fund, which Meyer said will eliminate the need for ongoing transfers.
Under expenditures for the equipment rental operations fund, Meyer said staff have proposed hiring a full-time mechanic that would work on city-owned vehicles. Most of the city mechanics on staff work to maintain the South County Fire vehicles. The $125,000 increase would cover the cost of the salary and benefits for the position, she said.
Meyer pointed out that since the city bills for its vehicle maintenance services, the expense would not impact the general fund.
Staff have also asked for a one-time $250,000 transfer from the capital development fund to the other governmental capital improvement fund to support projects currently underway. Meyer said the transfer was supposed to happen in 2020.
The city anticipates it will receive $3 million from the Snohomish County Council to fund construction of the Community Recovery Center — an emergency mental health facility to be located adjacent to the future Community Justice Center. The recovery center has garnered interest from state and county leaders who have promised to invest in the project.
“It is included in their proposed budget,” she said.
The Community Justice Center is a $69 million redevelopment of the city’s police department, jail and municipal courts. The bulk of the project will be funded through limited tax obligation bonds (LTGO) issued in June. However, supply chain disruptions caused an increase in construction materials and Meyer said the city will issue $5 million in additional principal funding to cover the full cost of the project in conjunction with the scheduled refunding on the city’s 2012 bonds in 2022.
The parks and recreation department is receiving $300,000 in grant funding from the National Recreation and Park Association (NRPA) to support equitable access to the city’s parks through the “ParksLove” project. According to Meyer, the funding provides an opportunity to “complete a community-driven, comprehensive park and trail capital project plan and prioritization project” that will focus on equity in the city’s park system planning.
Staff also proposed some other “housekeeping” changes to the budget.
A public hearing for the budget will be held at a to-be-determined date. The council is scheduled to adopt an ordinance amending the budget on Dec. 13.
In other business, the council was briefed on the assessed valuation and property tax levy information for 2022. Though the city budget is adopted biennially, the property tax levy amount and rate must be certified to the Snohomish County Assessor’s Office each year by the end of November. Meyer said it would have no impact on the budget.
The current assessed evaluation for all real property in the city is $7.95 billion. Based on a preliminary look, Meyer said the assessed evaluation in 2022 will be $8.47 billion. Of that, she said $86.5 million is new construction.
As the assessed evaluation goes up, the levy rate in Lynnwood would decrease according to the state’s property tax laws. According to Meyers, the more new development that comes to Lynnwood, the less residents will have to pay in property taxes.
“So, that growth really does help to lower the burden on existing taxpayers,” she said.
Last year, the city levied $4.3 million, which equates to 54 cents per $1,000 of assessed evaluation. For 2022, the city budgeted $4.5 million in property tax revenue, which Meyer said would drop the rate to 53 cents per $1,000 of assessed evaluation.
In Lynnwood, the highest lawful levy amount for non-voted general levy authority is $10.4 million. During her briefing, Meyer pointed out that the city’s levy is less than half of that.
During the discussion, Council President George Hurst said some people might think the city is generating a lot of tax revenue from construction in the city but added that was not the case.
“It’s not like (the city is) getting rich because of new construction,” he said.
A public hearing will be held Nov. 8 for the ordinance regarding the new levy rate. The council is set to vote on the ordinance at its Nov. 22 business meeting.
Earlier in the meeting, the council discussed proposed changes to the city’s 2021 salary schedule. Updates to the salary schedule include reclassifications for a civil engineer position and a public affairs officer position as well as other general changes.
Human Resources Manager Lori Charles said the city has been unable to recruit or retain qualified civil engineers based on its current pay rate, which she said was 21% less than comparable positions. Though staff are asking to increase the pay rate for the position, she added that the proposal is still less than other jobs.
Another proposal would reclassify the city’s public affairs officer position, which absorbed the job responsibilities previously handled by the intergovernmental affairs position. The job now also includes overseeing and managing the newly created race and social justice coordinator position.
Additionally, Charles said the public affairs officer has been tasked with budgeting development and management for several executive/city communications, intergovernmental relations and the race and social justice coordinator.
During the discussion, Hurst asked how the changes would impact the current public affairs officer’s salary. In response, Charles said their rate would be increased to the next step above what they are currently being paid.
“We look at the new pay grade and the steps in that pay grade and we move that person to the next highest step in that pay grade,” she said.
Hurst also asked how the city’s salary schedule will be impacted when the state’s minimum wage is increased to $14.49 per hour in 2022. According to Charles, staff would discuss the matter at a later date after future budget discussions.
The new salary schedule includes other smaller “housekeeping” changes, like renaming certain city position titles.
The council will vote on the salary schedule at its Nov. 8 business meeting.
–By Cody Sexton