File photo

File photo

Snoqualmie expects budget deficit in coming years

Losses in revenue from the coronavirus and other sources has led the city to dip into its rainy day fund.

Snoqualmie is planning on tapping into its rainy day fund to help cover a loss of revenue from the coronavirus pandemic and the formerly planned expansion of the Salish Lodge.

The city’s 2021-22 biennial budget projects the city will start the upcoming year with more than $41 million across all its funds. But by the end of 2021, it’s anticipating that will drop to some $33 million. The city’s general fund, which finances the Snoqualmie Police Department, fire and emergency management, parks, streets and administrative duties, is projected to lose some $915,000, finishing 2021 with a balance of $3.795 million.

Mayor Matt Larson said the city is facing two economic hits. The first stems from the Salish Lodge expansion falling through. The lodge and adjacent property was bought by the Snoqualmie Indian Tribe in 2019 from the Muckleshoot Tribe. The Muckleshoot Tribe had planned to develop the property, which would have brought in some $750,000 annually for the city of Snoqualmie.

But the property is sacred to the Snoqualmie Indian Tribe, and they have decided to protect it from future development.

The second loss of revenue is from the economic downturn brought on by the coronavirus pandemic and public health measures. In previous reporting, Larson said small businesses were hurting due to the pandemic. In July, he estimated that some small businesses had lost up to 75% of their sales, which translates also to lost sales tax revenue for the city.

As a result, the city is using reserves to maintain its current levels of service.

“What we’re trying to do is use of some of our rainy day fund because we think 2021 is a rainy day,” said James Mayhew, Snoqualmie City Council member and mayor pro tem. “Rather than cut all the way, let’s use some of our rainy day fund.”

Mayhew said that over the biennium, expenses will be greater than revenue, leading to a deficit. There’s a bigger problem in the future. By 2026, the city is expecting to be spending some $900,000 more than its revenues. And that’s assuming that staff opt to give up cost of living increases, which could add another $300,000 in costs per year.

To help offset this, the city could increase its property taxes by the 1% allowed each year, along with banked increases that they chose to not use in years past. If the council chooses to max out property tax increases, it could bring in some $164,000 annually. The city of North Bend is also considering increasing its property taxes as well.

The overturning of I-976 by the state Supreme Court will also help bring in some lost revenue.

Washington state is also facing a budget deficit. This summer, economists were warning of a $9 billion shortfall in state coffers. High summer spending, bolstered by federal aid to workers and businesses, cut that figure in half.

But as new coronavirus cases soar going into the winter, it’s unclear how businesses and sales tax revenue will be impacted. Cases have been steadily climbing in King County since mid-September, eclipsing the previous peaks seen in April and again in July.

As of Nov. 9, there were 30,866 positive cases countywide since the pandemic began, according to the King County coronavirus dashboard.

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