Future of City Finance AWC Annual Conference

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• Future of City Finance AWC Annual Conference
• Stan Finkelstein, AWC Executive Director
• Association of Washington Cities www.awcnet.org

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Washingtons Cities TownsAn Overview

• 281 cities towns 39 counties
• Total population living in cities is 3.77 million
  (total state population is 6.2 million)
• There have been 13 newly incorporated cities
  since 1993
• The percentage of the states population living
  in cities is now 61 - up from 52 in 1990
• The largest city is Seattle with a population of
  572,600 peopleand the smallest city is Krupp
  with 65 people.
• Impacts of growth More people demand more
  services and impact every element of government.
• City streets have increased by 5,042 centerline
  miles (41) since 1990 and carry 25 of
  Washingtons daily miles traveled.

Cities Grew 49
Source OFM 2004 Population Estimates
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Cities by Population Band
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2003 City Expenditures

2003 City Operating Expenditures (General
Special Funds, Excludes One-Time Capital
Utilities) 2.9 Billion
Total 2003 City Expenses (All Funds Operating,
Capital, Utilities) 7.8 Billion
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2003 City Revenues
2003 City Operating Revenues3.2 Billion
(General Special Funds Includes Restricted
Unrestricted Revenues)
Total 2003 City Revenues 7.8 Billion (All Funds
Operating, Capital, Utilities)
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Major 2003 Per Capita Unrestricted Operating
Revenues by Population (General Special Funds)
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How much of 1 of property tax goes to
Cities?Statewide Distribution for Tax
Jurisdictions for 2004 (including
voter-approved levies)
Statewide averages
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How much of the sales tax goes to cities?
Avg Total Rate 8.5
Cities 0.85 of 1 local sales tax (plus share
criminal justice with county)
15 of city 1 sales tax is shared with
counties Refers to sales tax levied in cities.
Counties have similar authority in
unincorporated areas.
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• Comprehensive look at city fiscal conditions and
  challenges.
• Key Findings Cities Statewide
• State of Washingtons Cities Cities in a
  Financial Vise
• Perfect Financial Storm of Rising Costs,
  Shrinking Revenues Due to Economic Downturn,
  Initiatives, and Changing Economy
• Transportation, Water, Sewer, Storm Water
  Infrastructure Basics Not Keeping Up

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Cities expect to be less able to meet financial
needs
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Cities are in a fiscal viseThe very rich are
different from you and me. -- F. Scott
FitzgeraldYes, they have more money. --
Ernest Hemingway
Compared to 10 years ago, city per capita
revenues have not kept up with inflation.
When adjusted for inflation, per capita revenue
has actually declined, although nominal numbers
show an increase.
City per capita revenues
City per capita revenues in 1993 dollars
Restricted and Unrestricted Revenues General
Special Funds Only
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Health Costs Outpace Inflation
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Even with ESSB 6050, cumulative initiative losses
will grow to 1.2 billion by 2007
-58 M
-80 M
-161 M
-194 M
-220 M
-245 M
-277 M
Totals adjusted for impact of ESSB 6050
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Impacts on service delivery past 4 yearsIt
aint over till its over. -- Yogi Berra
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Cities face 3.4 billion transportation capital
shortfall over next 6 years (2004-2009)
( may not add to 100 due to rounding)
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Water, Sewer and Storm Water Cities falling
behind in meeting needs6 Year Infrastructure
Capital Needs (excluding transportation)
Source Public Works Trust Fund Infrastructure
Study, 1998 2003
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Major Fiscal Trends/Impacts 1973-2005 It was
the best of times, it was the worst of
times. -- Charles Dickens, A Tale of Two Cities

• Growth in the Service Economy
• Rising Dependence on Sales/Excise Taxes
• State Funding of K-12 Education
• Impact of Unfunded Mandates
• Winnowing of State Local Governments Tax Bases
• Growth in Remote Commerce
• Impact of Direct Legislation Initiatives
• Rising Anti-Government Sentiment
• Voter Approval of Revenue Enhancements
• Rising Expectations/Demand for Services
• Peak and Valley Cycles of Fiscal Instability
• Increasing Expectations of Accountability and
  Performance Measurement (e.g. I-900)

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On the HorizonChallenges for City OfficialsWe
make progress by imperceptible gradations. --
Anonymous

• Need for governments to reconnect with their
  citizens
• Shrinking resources and increasing cost of city
  services
• Waning federal-state/local partnerships
• Public opposition to tax increases and potential
  initiatives reducing taxes
• Growing public capital deficiencies
• Loss of local autonomy (Impact of pre-emptions
  and mandates)
• Declining willingness of people to work for
  government or serve in elected office
• The need to develop a long-range strategy to
  address the roles and responsibilities of cities
  (and all governments)