Olympia City Council approves 2023 budget recommendations. Here’s what’s new this year

Steve Bloom/sbloom@theolympian.com

Olympia city manager Jay Burney said balancing the 2023 budget was difficult, with needs continuing to outpace resources. But the budget the city council has adopted is balanced, all city programs are still around, and city employees are getting a raise.

And current estimates show a revenue surplus, which should help ensure next year’s budget doesn’t leave anyone behind. This year’s revenue is expected to exceed the budget by about $2 million, which the city will save to help lessen the blow for next year.

The COVID-19 pandemic can no longer be directly blamed for any revenue or expenditure issues, and the city is now looking at how to control inflation and prevent an economic slowdown.

The 2023 preliminary operating budget totals $185 million, a 6.8% increase from last year. That’s about a $11.7 million increase. The general fund, which covers ordinary city operations, is $94.5 million, a 0.73% increase from last year. The largest chunk of the budget is taken up by Public Works, with about $79 million that goes mostly to utilities.

In the budget report, Burney said his budget takes steps toward addressing residents’ needs, especially around homelessness and climate resources. That includes two new positions in both those programs and funding to support the Thurston Climate Mitigation Plan.

Raises across the board

All city employees will receive a 5% wage increase, which Burney said matches the labor contracts the city has. Aaron BeMiller, the city’s director of finance, said every 1% increase costs roughly $460,000 from the general fund and $600,000 from the overall budget. The raises will cost the city about $5.3 million total.

The wage increases are needed to offset the rising cost of living, as well as increases in city medical insurance plans, BeMiller said.

The new positions

The general fund will support four new positions in the city’s fight against climate change and homelessness.

A director and a specialist position will be created in the housing sector, and a building and energy program manager and climate specialist will be added to the other. It’s a total expense of $525,000 a year, including salaries and benefits.

That’s not all. Burney said the city is adding 11.75 other full-time employees, including a paramedic, accounting technician, and a program manager for the newly acquired armory building. Altogether it’s costing the city about $1,438,000 a year, including salaries and benefits. Other than General Fund dollars, these positions are funded through some utility rates dollars, parks and cultural access tax funds and more.

Pamela Braff will oversee the climate program, and Darian Lightfoot is taking on the director position for housing and homelessness.

“Part of our work in 2023 is to make sure we can communicate how we’re moving the One Community Plan forward in this community,” Burney said. “So this restructuring allows us to better connect to the plan, better communicate with the community what and how we’re doing, and to make sure everyone in our community that’s houseless and needs access to resources is getting that help.”

Public safety and police

About $26.1 million of the general fund will be used for the police department, which is 6.7% more than last year’s $24.5 million.

Olympia and Tumwater have been in discussion about forming a Regional Fire Authority, which would take the financial responsibility away from the cities and give them to a separate agency funded by voter-approved levies. But the general fund wouldn’t see an impact until 2024. For now, the city has estimated the fire department will spend about $20 million next year, about a 6% increase from this year.

Salary increases for OPD are still being negotiated with labor unions. And nine new firefighters were recently hired, and overtime costs are expected to fall as a result.

The City of Olympia is using $500,000 of its American Rescue Plan Act funds to offset the cost of body cameras for police officers. Burney said the city will use OPD funds early in 2023 to add technology to the body camera system so when a taser is set off, body cameras are activated. Burney said it’s not standard for body cams to have that, but it’s an added layer of transparency.

Housing and homelessness

Estimates for 2023 put the city’s housing and homelessness response program at about $5.3 million in expenditures. In 2022, it was about $2.5 million. There are many housing projects in the works, including the Family Support Center’s supportive housing project set to be completed and occupied by December 2023. And Home Fund tax dollars will continue to support the building of new homes, shelters and apartments, as well as shelter operations. Revenue from the city tax is estimated at $2.1 million for 2022, which will go toward these future projects. The rest of the department’s funds come from grants.

The biggest jump from last year is the cost for services, going from $1.6 million to $4 million.

With the state Department of Commerce stepping in to help fund the Franz Anderson tiny home project on the city’s east side, the city is using about $1.1 million of leftover ARPA money to support operations at Quince Street Village. But those funds aren’t sustainable, so another revenue stream will need to be identified after 2023.

Taxes and fees

There aren’t any tax increases coming next year that citizens aren’t already aware of. The only difference is the Inspire Olympia cultural access tax that was approved by voters earlier this year. At first, the preliminary budget looked to be several million dollars over in expenses, but that was before the special tax revenue was included to help offset its expenses.

Bi-monthly water bills may be a tad more expensive over time, between $14.77 and $16.53 more every other month. Impact fees for new construction and permits are going up in price slightly, too, as a result of inflation.

Other ongoing costs

Burney said the city has about $2.6 million in ongoing department costs, including more than $1 million in emergency homelessness response, that could not be funded. These sort of one-time budget items include handling situations such as the Ensign Road encampment. The council will be considering how to pay for these either using 2022 year-end funds or another option in 2024.

Another $100,000 is going to be set aside to hire a consultant for wayfinding needs in the city, such as updating signage to make it easier for people to navigate downtown. The fire department also needs new bunker gear, which will cost $70,000. And another $400,000 is needed for filling open positions, covering legal services, software subscriptions and more.

Climate program manager Braff has requested $110,000 for work to support the Thurston Climate Mitigation Plan, and another $280,000 is being set aside for work in the reimagining public safety process. The city also needs $500,000 for continued building repairs and replacements, and some funding to support the possible creation of an RFA.

For transparency’s sake, and to make the management of funds a little easier, some money was reshuffled in this year’s budget, which at first glance looks like overspending. Burney said there’s about $3 million less in other revenues in the general fund as a result of the Community Planning and Development department’s funding sources being split. But all CP&D activities will be accounted for under the Development Fee Fund, which means nearly $3 million was moved from the general fund.

Lisa Parshley, the chair of the finance committee, said there’s more work to be done to address some community concerns regarding funding allocations. Several people spoke during the public hearing process about the lack of funds for sidewalk construction and maintenance.

Olympia resident Jim Lazar said he’s thrilled to see more funding for climate work, especially around sea level rise. But having more funding for sidewalks has to happen. He said $175,000 was promised for sidewalk funding back before the 2008 financial crisis, but it hasn’t been discussed since. He said in today’s dollars, that amount would be more than $250,000.

Parshley said the finance and land use committees will be adding the issue to their 2023 work plans, and they’ve already discussed the possibility of a one-time program to fix the problem using 2022 year-end funds.