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Managing general fund focus of budget
Managing decreased general fund revenues and a need to diversify Maple Valley’s tax base are the two main themes in the city’s 2014 preliminary budget.
The Maple Valley City Council is scheduled to adopt the 2014 budget by Dec. 16.
Among the stated goals of the city for 2014 are restarting the Legacy Site planning process, attract commercial growth to diversify the city’s tax base, support improvements to Lake Wilderness Park and Lodge, assess options for municipal court and jail services for 2015, and pursue grants for transportation improvement projects.
City Manager David Johnston wrote in his annual budget message that the city’s focus in recent years has been on the general fund. Johnston noted that home development and sales as well as the development of Fred Meyer and Four Corner Square boosted the general fund, but as the city approaches residential build out those revenue streams will shrink.
“If the current trend continues, the city will be faced with making fundamental changes in how it budgets for services it provides beginning in the 2016-2017 time frame,” Johnston wrote.
Johnston explained in his budget message that it is critical the city diversifies its tax base in order to maintain the general fund.
“The Powell Development-Fred Meyer project has certainly helped the city begin to achieve the objective of a diverse revenue stream, allowing the city to weather the storm attributable to the loss of state-shared revenue,” Johnston wrote. “Focused and assertive economic development is vital and this reality has been recognized by the council as the city’s top priority.”
The general fund is running a deficit this year, although slightly less so than expected. The budgeted deficit for the general fund in 2013 was $891,550 and it is currently projected that number will come in at $321,082. Johnston attributed the better than expected number to more homes permitted than anticipated and the commercial development at Maple Valley Town Square and Four Corner Square.
“The general fund is funded from different sources. We had more money coming than spending and then we were spending more money then we were bringing in annually, and that’s what we called the deficit,” Johnston said in a phone interview Tuesday. “And what covered that deficit is what covered that … the years of surplus are what’s covering the deficit.”
The preliminary budget for 2014 has a projected general fund deficit of $581,587, which is 35 percent smaller than was projected for 2013.
“In the long term, commercial economic development is needed as new housing has slowed and available inventory of lots and land is diminishing at a faster pace than earlier projected,” Johnston wrote. “Since incorporation the city has depended on residential development and it has served us well, but can no longer.”
Johnston added during the phone interview was that the philosophy of previous city council members in years past was that growth should pay for growth.
“Because it generated a surplus today our growth is paying for the deficit,” Johnston said. “Previous growth is paying for today’s growth. It also sends a strong message … it’s not sustainable. That’s why we’re changing our focus to create jobs.”