Story Photos
 Photo by Bill Wagner Kalama City Hall closes from 1 to 3 p.m. each afternoon so city clerks Krystal Collins, left, and Sue Seay, shown here on Thursday, can catch up with paperwork. |
Cities in Crisis
Sunday, December 12, 2004 12:43 AM PST
By Sally Ousley
Printable version
E-mail this articleKALAMA -- Each weekday afternoon, City Hall closes for two hours so city clerks can catch up on paperwork that piles up. Paperwork has been a problem since two clerks positions opened up in the last year but weren't filled.
The city shares a police chief with Ridgefield because it can't afford its own, and it's been years since the police department, which is down to four officers from five, has been able to provide 24-hour coverage.
Library funding as been cut so sharply that it's only open five hours a day six days a week, and librarians can only afford new books because of the fundraising efforts of a civic group, the Friends of the Library of Kalama.
The financial struggles of this town of 1,800 are mirrored across Washington. Local government officials say they're facing a financial crisis that is on the verge of undercutting their ability to pay for essential services.
Voter-approved tax limits, the struggling economy, and rising costs are causing officials to deplete reserves to balance budgets. The trend, they say, is unsustainable, and small cities in particular are struggling because they no longer have the retail and industrial foundation to drive up tax revenues when the economy does improve.
Seattle nonprofit Northwest Small Cities Services consultant Jack Collins said many cities don't have a sufficient financial base to meet basic needs.
"They're just caught," he said. "Now they're just barely getting by."
"There's a recognition that the finance structure of local government needs to change, and without change, we truly have concerns for the ongoing existence for small rural government," he said.
Jim Justin, assistant director of the Olympia-based Association of Washington Cities, said small cities are not big job centers, and they struggle when the economy struggles.
"It is now when many cities are feeling the effect of initiatives that were passed years ago. We were able to stick our finger in the dike, so to speak."
Officials say they can't play Hans Brinker much longer.
In Longview, officials balanced next year's budget without major cuts, but they are did so by tapping $1 million in cash reserves. The city, officials said, is in a "precarious financial situation" and may have to make cuts if the economy does not improve by 2006.
Woodland is the county's fastest-growing city in the county, feeding off growth in the Vancouver and Portland areas. Its population of 4,100 is stressing law enforcement and the fire department, but the City Council is considering cutting staff to balance the budget.
Castle Rock, population 2,100, is applying for grants for its operating budget, which funds basic city services.
For the second time in three years, Cowlitz County commissioners had to cut millions of dollars from the budget and eliminate jobs. They're also raising the sales tax to help fund law and justice programs.
It's not hard to understand Kalama's struggles.
The city's sales tax revenues have been flat or declined over the past six years, and the city lost all of its motor vehicle excise tax revenues as a result of the 1999 passage of Initiative 695. The city's operating budget --- the part that pays for essential services such as police protection, the library and clerk's office --- is 8 percent lower than it was in 2000.
Expenses, meanwhile, continue rising.
The starting salary for a police officer, for example, increased from $2,018 per month in 1994 to $2,688 per month in 2004. The cost of liability insurance has soared, from $11,427 in 2001 to $67,377 in 2003. Benefits for city employees also cost more, increasing from a total of $23,611 in 1996 to $38,000 in 2003.
Statewide, according to the Association of Cities, half of city budgets are spent on public safety, and police and fire wage increases exceeded inflation by almost 50 percent over the past 10 years. Also, health insurance costs jumped 35 percent in the last two years and were expected to increase by 23 percent to 28 percent this year.
Kalama Hardware Store owner Scott Merwin sees first-hand why the city is in financial straits.
"For the last three years, my business has been down 20 percent a year," he said, which results in lower sales tax payments to the state, city and county.
Merwin said he hasn't noticed any difference in police coverage or maintenance of city streets. But he said he understands how rising costs and flat or declining revenues eventually will undercut city services.
Many officials trace the beginnings of the financial struggles to passage of I-695, though the impact wasn't felt immediately because the Legislature initially "backfilled" those revenues from state coffers. The vehicle tax initiative was approved by voters, then rejected by the courts but eventually adopted by the Legislature.
"We knew back then, for the first few years, there would be some money from the Legislature, but many cities budgeted with reserves and they had used reserves to get through the next few years," said Justin, the Association of Cities official.
"Here we are a few years down the road, and support from the Legislature has dwindled to $2 million statewide in 2004 compared to more than $100 million in 2001."
Other factors are at work, though.
The rise of a commuter society in Western Washington has shifted sales tax revenues away from small cities to larger cities, according to economists, city officials and a Daily News analysis of sales tax records (see sidebar).
Justin noted that sales tax revenue has increased lately in larger cities up and down the I-5 corridor, but not in smaller, rural areas.
"Clearly, rural, small cities are experiencing significant fiscal problems."
Kalama Mayor Pete Poulsen agreed with Justin's assessment. Kalama, he said, is a bedroom community, with most people commuting to jobs outside the city, and those people aren't stopping to shop in Kalama.
The combination of spending limits and economic shifts is going to force cities to pare back, said Collins, the small cities' consultant.
"I don't know if it's going to be in 2004, 2005, 2006, and we don't want to threaten voters, but there will be a further erosion of city services," he said. "We simply will not be able to provide the level of services that people expect.
"I want to stress that it takes a while to go broke. I don't think I can reiterate enough that city officials had to stick their fingers in the dike, but it's come to that point where the pressure is just too much and there are going to have to be some changes."
Justin said it's becoming common for cities to share resources.
"It's common in many cases, for cities to band together," he said. "I think city officials are being creative to provide core services.
"It's all the cities can afford right now."
"I think cities are getting leaner, there's no question about that," Collins said. "But whether that's more efficient, I don't know. They're getting by."
He said some small cities --- those with just a few hundred residents --- may be forced to shut down, or "disincorporate."
Mayor Poulsen said he believes Kalama did well getting a balanced budget for next year.
"We've had to go through some cost cuts, but we have a good group of people who work for the city. We've haven't had to cut services, except for City Hall (hours) and I think people are getting used to that now."
He and Merwin are hoping that better times are ahead and that efforts by the Chamber of Commerce and Port of Kalama will bring new businesses -- and tax revenue --- to the community.
"Then more houses will be built and more people will move in," Merwin said.
Officials are hoping that voters have vented their anti-tax fury and won't approve further limitations.
Counties and library and fire districts also are in "huge trouble" because of the same factors pinching small cities, Collins said. They must join with city officials to petition the Legislature for help.
"They need to get together and propose solutions to the Legislature that provides for them staying alive."
Reporter Hope Anderson contributed to this report.
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