The Redmond City Council approved a two-year budget package that features a bump in property taxes, approximately 50 layoffs, along with slight increases in water/wastewater and business license fees.

In addition, city employees will get a one percent Cost of Living Allowance (COLA) increase in 2011 and possibly additional increases in 2012, depending on next year’s union negotiations, according to Malisa Files, the City of Redmond Financial Planning Manager.

The 2011-12 city budget is fiscally responsible, consistent with plans to improve two urban centers (Downtown and Overlake), reflects priorities that were set through a public input process and assures that vital public services were not compromised, according to Redmond Mayor John Marchione.

Marchione pointed out that in 2008, the average resident paid 5.6 percent of their personal income for city services. By 2012, that same resident will pay 5.2 percent, Marchione said.

“Overall, Redmond is one of the few cities that are not under financial distress,” Marchione said. “We have not taken shortcuts by furloughing employees or spending down our reserves. This would lead to larger problems down the road. We have made the tough decisions when called for. … Our financial strength and stability is the envy of the region.”

The council voted 5-2 to adopt the mayor’s two-year $523 million budget package with minor amendments at Tuesday night’s meeting at City Hall.

The most notable amendment to the budget by the council was raising the business license fee by $1 each year over the next two years. The city’s total business license fee will go from $90 in 2010 per Full-Time Employee (FTE) to $91 in 2011 and $92 in 2012. This change will result in an approximately $240,000 in revenue for transportation and transportation demand management projects, according to Files.

“The business fee increase was minimal,” said City Council President Richard Cole. “One dollar per employee per year is not going to have much impact on small business. … The money from this fee increase will go into a fund that will be used for transportation projects and will be spent as recommended by a committee of businesses and residents. These projects will help all businesses to increase their bottom line by allowing easier access to their businesses or make it easier for their employees to get to work.”

For the upcoming 2011-12 biennium, the city will have $15 million in reductions “through right-sizing of programs due to a decline in service demand, innovations and efficiencies proposed in programs and some service reductions,” Files said. The adopted budget also continues the Budgeting-by-Priorities (BP) process, implemented in 2008. The Reporter recently did a two-part series breaking down the six priorities — Business Vitality, Clean and Green Environment, Community Building, Government Responsiveness, Managing Infrastructure and Growth and Safety — used by the mayor and city officials to develop the 2011-12 budget. Visit www.redmond-reporter.com to read the stories.

“I am very pleased to have passed a budget that reflects the priorities of the residents of Redmond,” said City Councilmember Hank Margeson, who is the chair of the public administration and finance committee. “It was clear that the Budget-by-Priorities is working even in challenging times.”

Margeson, Cole, along with fellow councilmembers Pat Vache, John Stilin and Kim Allen voted for the budget while David Carson and Hank Myers voted against it.

Myers said he felt city officials could have found up to $400,000 in other cuts, which he said would offset the need for a property tax and business license increase.

“I just think this is not an appropriate time to increase any taxes,” Myers said. “I think there are expenses that could have been reduced eliminating the need to raise taxes, but I couldn’t sell it to other people.”

SLIGHT INCREASE

Redmond homeowners can expect to see a one percent property tax increase, amounting to about $7 per year, and water/wastewater fee increases amounting to about $5 per month, for a total increase of around $67 per year.

The $7 property tax increase is based on the rate going from approximately $1.56 per $1,000 assessed value (AV) to $1.57 per $1,000 AV. On a home valued at $400,000, Redmond’s portion of the property tax bill would go from approximately $622 to $629 annually, assuming that assessed valuation remains relatively neutral.

Marchione said the tax raise is a long-range planning policy that doesn’t force the city to face “the choice between a large tax increase or a dramatic reduction in services like many communities in the state and nation.”

As for the water/wastewater increases, Cole said that about 80 percent of the utility increases were “a flow through from King County that we have no control over.”

In addition, the budget calls for a net decrease of 50.36 FTEs from the fiscal year 2009-10 staffing levels, along with continued commitments to build Redmond Fire Station 17 on Northeast 116th Street and make further investments in the downtown and Overlake neighborhoods.

The 50 FTEs being reduced include 22 employees who were already laid off in November 2009. Those 22 employees had been working in development review and those positions were eliminated because development had stopped due to a poor economy.

As for COLA increases for city employees, Files said the 2011-12 budget includes a one percent raise in 2011, with additional funds placed into a contingency fund “to mitigate any negotiated increases” for 2012. The 2011-12 budget features a total of approximately $3.6 million for COLA increases, Files said.

FEW AMENDMENTS

Besides the business license increase, council had few amendments, which are outlined below.

• Reduced $200,000 from Parks Administration/Capital Improvements offer that was earmarked for work on the Metropolitan Parks District, a regional parks planning committee, and restored the .50 FTE prosecutor in the Legal budget and put the remaining money in the Council contingency fund.

• Funded a portion ($250,000) of the 160th Avenue Northeast extension project through savings achieved from the Washington State Department of Transportation’s (WSDOT) State Route 202 project.

• Funded a portion of the Northeast 116th Street and 172nd Avenue roundabout from savings achieved from the SR 202 project and funds from the Traffic Safety Improvement Program.

“There weren’t many changes to the (mayor’s proposed) budget,” Files said.

The mayor’s proposed budget can be seen here. Council’s amendments can be seen here. Just click the link under “New Business.” The final adopted budget will be up on the city’s website by the end of February, according to Files.

Overall, the mayor was pleased with the final budget product, especially considering the harsh economic times.

“This budget meets the priorities of the community by delivering the services requested at basically the same price. The adopted budget cuts $15 million and 50 positions from the previous budget. It is responsible action in our economic environment. The reductions we have made have a small impact on service delivery and we will work creatively so the public will not notice.”