Kirkland Mayor Joan McBride addressed the Greater Kirkland Chamber of Commerce in her annual State of the City speech on Tuesday at the Woodmark Hotel. In the speech, McBride spoke of the achievements of the City Council over the past year on a wide range of issues, but her most somber moments came as she explained how Governor Christine Gregoire's planned cut in annexation funding would severely impact the City of Kirkland.
The Governor is supporting House bill 2146, sponsored by Rep. Ross Hunter (D-48th), which would cut annexation funding by 10 percent the first year, 20 percent the second year, 30 percent the next year, etc.
Gregoire's maneuver is not sitting well with Mayor McBride. "We have already budgeted the funds. We need to have the sales tax credit." said the Mayor during her address to the Chamber, "A promise is a promise." She continued to say that annexation funding is the city's number one priority on its legislative agenda.
With Kirkland's annexation of 33,000 people completed in June, the citizens of Kirkland are finding that the promises made to them regarding annexation funding were not worth the paper upon which they were written.
Leading up to the 2009 annexation vote, many of our state, county and local officials promoted annexation not only as a good governance measure, which it was, but also as a sound fiscal policy. Costs associated with annexation were to be mitigated by the state. Or so the citizens lead to believe. The truth is that without help from Olympia, Kirkland can't pay for the increased services it is now required to provide as a larger city of over 80,000.
It is now clear that for some, annexation was so important to pass that they did not care about the financial ramifications. Kirkland's annexation budgeting relies heavily on the most risky of funding sources: the promise of ten years of future sales tax revenue streams which could be cut at any time. There was no guarantee. To make matters worse, the City has no contingency plan to fall back on. The result will be further cuts in service levels from the City.
Our elected officials try to educate the public on the importance of a sound fiscal practice: funding ongoing services with stable funding sources.
They describe property taxes as some of the most stable and therefore the most prudent sources of funding.
A less stable source of funding is sales taxes due to volatility in the economy.
An order of magnitude worse is what Kirkland used to fund annexation: the mere promise of future revenue from sales taxes.
Kirkland did not pay for annexation by raising our property taxes or sales taxes. Instead, Kirkland's City Council relied upon a ten-year, $40+ million promise from Olympia. Our elected officials were either choosing to ignore the facts or they were so consumed with passing annexation that they disregarded their responsibility to prudently manage our budget.
While the people of Kirkland acted in good faith with regard to annexation, our elected officials were looking out at the next election. The mantra of annexation being a good governance issue is wearing thin. Since when did good governance mean promising services without the ability to pay for them?
In addition to annexation funding, the Mayor discussed a possible Google expansion, redevelopment of Kirkland Parkplace, continued focus on Totem Lake, the BNSF rail corridor and a proposed $20 car fee as part of a transportation benefit district.
The Mayor closed her speech to the one hundred plus in attendance with her now trademark, "Kirkland is open for business."