2017-2018 Budget Overview
King County provides critical services to millions of people, with a projected two-year budget of ~$10 billion, 14,000 employees and nearly 60 lines of business. Most of the County’s programs are financially healthy and will continue to meet the needs of a growing community. Our strong regional economy has boosted revenue for some of our funds, including Metro Transit, and the County continues to make strategic investments in important programs and services that reflect the values of King County residents. However, structural revenue limitations imposed by the State mean that other funds are under severe financial stress.
2017-2018 Budget Overview with Dwight Dively
Despite our strong regional economy, several critical services, including public health and safety, are not financially sustainable as a result of funding limitations imposed by the State. State law puts an arbitrary 1 percent cap on the revenue increases counties can receive from property taxes. Even as the Executive has delivered on his promise to reduce cost growth during his administration, these limitations mean that revenue can’t keep up with inflation and the increase in demand for services as the population grows.
After years of increasing efficiency, decreasing our cost growth, and drawing on reserves, we’ve reached the point at which there are no good options left to balance the budget.
The General Fund faces a gap of about $50 million. About three-quarters of the General Fund is spent on public safety, so major program changes and service reductions are likely.
Net 2017/2018 General Fund Expenditures
Note: 2017/2018 true General Fund-supported programs without contracts or interfund.
In addition, the Public Health Fund has accumulated a deficit, mostly due to flat or declining federal and state funding. The Best Starts for Kids levy will preserve and expand some programs, but considerable financial pressure will remain for other Public Health functions. Much of Public Health’s flexible funding comes from the General Fund, so the General Fund’s challenges may also affect Public Health.
Federal, State and Local funding support for Public Health, 2008-2016
The Executive’s budget development will include special focus on four strategic initiatives:
- Best-Run Government: King County's goal is to be the best-run government in the nation, delivering better services, improving operations and increasing efficiency. We are committed to embracing continuous improvement, instituting best management practices, empowering employees to innovate, and striving for second-to-none customer service.
- Equity and Social Justice: Inequities hurt everyone, and for our region to prosper, we need everyone to have a fair shot at success, regardless of where they start out in life. Through our Equity and Social Justice initiative, we are investing in upstream strategies, where the needs are greatest, to ensure that our decisions, policies and practices produce gains for all residents.
- Confronting Climate Change: Climate change threatens the health and safety of our residents, economy and environment. Puget Sound is rising, rivers and streams are getting warmer, Cascade snow packs are getting smaller, and wildfire risks are increasing. King County’s Strategic Climate Action Plan, a five-year blueprint for County action to confront climate change, integrates climate change into all areas of County operations, as well as our work in the community.
- Regional Mobility: Demand for transit is at an all-time high, and King County Metro Transit is experiencing growing sales tax and fare box revenue, while benefiting from low fuel prices. New financial policies are being developed that will establish and fund a “rainy day reserve” to help preserve service in a future recession. Service expansions will be considered but have to be balanced with capital needs for new or expanded bases, layover facilities and potential new park and rides.
King County’s revenue comes from a variety of sources. Property and sales tax make up about one-third of our revenue. The rest comes from charges for services, state and federal funding, and other sources, including fines, licenses and permits.
Total Budget Revenues by Type, 2015-2016
King County Expenditures, 2015/2016
The King County General Fund pays for the traditional functions of county government and other day-to-day services that do not have dedicated funding. It is the County’s most flexible revenue stream and makes up about 15 percent of the overall budget.
About three-quarters of the General Fund supports state-mandated criminal justice and public safety functions. The remainder pays for other programs, including elections, assessments, and health and human services.
Net General Fund Expenditures by Category, 2015/2016
Property taxes are the largest source of revenue for the General Fund. See below for a breakdown of revenues for the General Fund.
General Fund Revenue, 2015/2016
Most of the County’s programs are financially healthy and will continue to meet the needs of our growing community. Our strong regional economy has boosted revenue for some of our funds, including Metro Transit. However, structural revenue limitations imposed by the State mean that the General Fund is under severe financial stress.
Unlike cities, which have a broad portfolio of taxes including business and utility taxes, the County relies heavily on property tax. State law puts a 1 percent limit (plus new construction) on the revenue increases counties can receive from property taxes, the largest source of General Fund revenue. As a result, revenues counties receive grow at a much slower rate than the cost of providing services. Even as the Executive has delivered on his promise to reduce cost growth during his administration, these limitations mean that revenue can’t keep up with inflation and the increase in demand for services as the population grows—about 3.5 percent annually.
All agencies that receive funding from the General Fund are facing potential reductions. Because criminal justice and public safety agencies make up about three-quarters of the General Fund, major program changes and service reductions in those areas are likely.
In addition, the Public Health Fund has serious financial problems, mostly due to flat or declining federal and state funding. The Best Starts for Kids levy will expand some programs, but considerable financial pressure will remain for other Public Health functions. Much of Public Health’s flexible funding comes from the General Fund, so the General Fund’s challenges may also affect Public Health.
King County has a $10 billion budget and provides a wide variety of services, from Transit to Human Services and Public Health. Many of our funds are financially healthy as a result of our strong regional economy and good financial management. Most of these are dedicated funds—contracts, fees and special levies that have been collected for specific purposes and must be used to pay for those services. For example, bus fares must go toward paying for transit and sewer fees toward paying for wastewater treatment. By law, the County cannot use dedicated funds to help balance budgets in other funds that may be facing deficits.
The County is on a two-year, or biennial, budget cycle. The next biennial budget will run from Jan. 1, 2017 through Dec. 31, 2018. The Executive will submit a budget proposal to the King County Council on Sept. 26. The Council will review the budget in the fall, holding hearings and public meetings. The final budget will be adopted by the Council in mid-November and will take effect on Jan. 1, 2017.
Counties are required by law to balance their budgets, so we will need to make difficult decisions to balance the General Fund budget in the short term. In the long term, the structural gap between revenues and the cost of providing services can only be resolved through the collaboration of the State Legislature, counties, cities and voters.
King County takes steps every day to become more efficient. Since 2010, the County has been working with unions and employees to reduce growth in costs and provide more value for every public dollar spent. Our efficiency efforts, known internally as Best Run Government, have reduced the General Fund cost curve from a historical rate of 5 percent to forecasted growth of about 3.5 percent. By 2020, these efforts will save more than $200 million. We have reached a tipping point where additional cuts will mean that entire programs and services will be eliminated.
Counties across Washington state are on the verge of a financial and service delivery crisis. Counties are required by law to provide essential services, including elections, assessments, law enforcement, prosecution, public defense, court systems, and jails, but the limits on General Fund revenue sources and growth rates mean revenue cannot keep up with costs.
Yes. Fixing the County’s broken revenue structure has been and continues to be our top legislative priority. Right now, we are working with our associations of counties, cities and public safety officials to replace the 1 percent growth limit with a limit that is tied to inflation and population growth.