Statement from Council Chair Dave Somers re: 2016 Budget

I’d like to thank Executive Lovick and his team for the work they put into developing their recommended 2016 budget. Council staff will be reviewing the specific details as to what is, and what may not be, included in their recommendation over the coming weeks.

It’s critical that the budget be balanced and sustainable, that it recognizes and accounts for financial challenges we face, and that it puts the county on track to resolve our current budget deficits.

The Council will closely examine how the Executive plans to address what is at least a $6 million plus hole that we know we have for 2015. There are difficult choices to be made. We cannot afford the kick the can down the road.

Known concerns include:

- As of September 22nd, eight loans totaling $34.5 million have been needed to meet general fund commitments
- Revenues for 2014 were $2 million below projections thus creating a budget hole in 2015
- Revenues for 2015 (through June) are already $2.7 million below projections
- General Fund departments are projected to exceed the 2015 budget by $4.5 million by the end of the year
- General Fund reserves are projected to drop below 5%, when we know the required level of liquidity for operations is at least 8%, and the adopted target is 11%
- Credit agencies have expressed concerns regarding the level of reserves
Additional pending issues on the horizon include:

- Potential loss of at least another $5 million from the Quil Ceda Village sales tax revenues
- Potential large payouts relating to pending litigation
- Pending contract agreements with the county’s labor unions
- Future costs associated with the Affordable Care Act
We need to be conservative in our projected tax revenue assumptions and avoid any temptation to be overly optimistic. We have seen that while such optimism may make it easier to develop and adopt an annual budget, it leaves us with very little flexibility if such revenues are ultimately unrealized.

The Council will be thorough and diligent in its review of Executive Lovick’s proposal to make certain the budget we adopt for 2016 is realistic, and one that will put the County on the right track moving forward.