By Devon O’Neil

Kenmore City Manager Rob Karlinsey could see the collision coming. For more than a decade, whenever the city produced a financial forecast, the graph lines depicting revenues and expenditures were slated to cross two or three years in the future.

Thankfully, those lines never actually crossed in real life, but only because the city repeatedly took what Karlinsey calls “temporary Band- Aid measures” to delay the inevitable: adding a franchise fee for water and sewer, then a car tab fee. But the forecasts remained foreboding. “When your cost of doing business is growing at 4 percent a year and revenue is flat, that’s a problem,” Karlinsey says.

Kenmore, a bedroom community of 23,000 residents just north of Seattle, doesn’t have many cash registers or credit-card machines. Sales tax reaps around $3 million a year, with another $5.4 million coming from property tax, Kenmore’s top revenue generator—which, by law, can’t increase by more than 1 percent a year. Eventually, Karlinsey had to tell his city council: I am running out of rabbits to pull out of the hat.

In early 2019, Karlinsey and city staff, including Finance Director Joanne Gregory, began studying neighboring Kirkland and Shoreline, which had developed financial sustainability plans. At Kenmore’s invitation, leaders from Shoreline came and spoke to the city council, explaining what worked and why. Ultimately, Karlinsey says, Kenmore modeled its process after Shoreline’s, with input from a number of other municipalities as well.

The council approved the formation of a seven-member citizen task force in November 2019. In 2020, the task force met regularly from January through August, with a three-month pause in the spring due to the pandemic. Kenmore also hired a regional consultant, Management Partners, to evaluate where it could trim its expenditures and bolster its revenue.

City staff held online open houses and, in August 2020, implemented an interactive tool called Balancing Act to solicit ideas from residents. “We basically said: Tell us where you would cut and where you would add. And you build a budget,” Karlinsey says. “We got several hundred submissions.”

While city staff worked to refine the plan, they decided to make permanent a handful of temporary budget cuts they’d implemented due to the pandemic. The adopted financial sustainability plan calls for revenue generators like a cable TV utility tax and photographic traffic enforcement (both programs will be phased in starting in 2022), as well as tapping into property tax banked capacity and a garbage utility tax in later years. Council approved the plan in October 2020, guaranteeing Kenmore a sustainable budget—no ominously crossing lines—through 2028. Reserves are forecast to grow from $5.2 million to $6.3 million over that time.

“It was messy, and there were hard conversations,” Karlinsey says of the process. “It took guts for the task force to propose what they did and for the council to adopt it.” As for what happens in 2028? “Then we’ll have to do it all over again.”

For more information: kenmorewa.gov