The City of Kent Financial Strategy Resource Team’s Recommendations August 20, 2006

Assumptions and Beliefs of Committee Current structural deficit of $1.5 million per year Current structural deficit of $1.5 million per year Cash reserves of $8.0 million Cash reserves of $8.0 million Services are provided at a reasonable cost Services are provided at a reasonable cost A reduction in services would be detrimental to Kent A reduction in services would be detrimental to Kent Economic development is the key to a stable economic future for the citizens of Kent Economic development is the key to a stable economic future for the citizens of Kent

Revenue Sources Increase in taxes is primary source of funds to reduce deficit and provide funds for economic development. Increase in taxes is primary source of funds to reduce deficit and provide funds for economic development. Plan allocates $1.6 million to operating budget and $1.1 million for economic development. Plan allocates $1.6 million to operating budget and $1.1 million for economic development.

Impact of Recommended Revenue Generators Alternative 1Alternative 2RevenueAlternative Source of FundsRate Impact Credit for taxes paid1.50%1.89% $ 1,000,000 $ 400,000 Tax rate2.10%2.20% 680,000 1,360,000 Property taxesIncrease 1 mil 320,000 License feeIncrease by $ ,000 Fully-cost enterprise activities 200,000 Other fees 200,000 Total increase in revenues $ 2,525,000 $ 2,605,000

Impact on Per Capita City revenue per capita would increase to $815 from $732. City revenue per capita would increase to $815 from $732. Total cost burden per capita including school taxes would increase to $3,304 from $3,221 Total cost burden per capita including school taxes would increase to $3,304 from $3,221 Lower percentage increase than decrease in state tax reduction. Lower percentage increase than decrease in state tax reduction.

Sunset Provision The tax rate increase and the tax credit should have a sunset provision of seven years. The tax rate increase and the tax credit should have a sunset provision of seven years. Adequate time to evaluate the economic development experiment. Adequate time to evaluate the economic development experiment.

Cost Savings The City needs to reduce costs by $200,000 to $300,000 without reducing services. The City needs to reduce costs by $200,000 to $300,000 without reducing services. Such savings may come from: Such savings may come from: –Combination of positions –Redirect administrative personnel to frontline –Share services with other cities –Use of technology to reduce labor –Use long-term financing due to flat yield curve

Economic Development Long term strategic plan needs to be developed and implemented by the City Manager, including Long term strategic plan needs to be developed and implemented by the City Manager, including –Creation of community-wide non-profit development corporation –Foreclosure and razing of old hotel –Increase code enforcement –Destination events –Subsidy of incubator –Tax abatements –Infrastructure improvements –Land bank acquisitions –Marketing –Hotel and conference center

Other Issues That Came to Our Attention Increase funding for tax collections Increase funding for tax collections Sale of surplus properties Sale of surplus properties Proper control over permit issuance Proper control over permit issuance The City needs to negotiate fairly with labor but needs to ensure that personnel costs will not rise faster than the City’s tax revenue base The City needs to negotiate fairly with labor but needs to ensure that personnel costs will not rise faster than the City’s tax revenue base Consider implementation of street light violation and school zone speeding cameras Consider implementation of street light violation and school zone speeding cameras