Mountlake Terrace City Councilmembers during their Sept. 17 work/study session received updates on city financial conditions amid the COVID-19 pandemic and an upcoming outreach related to the Recreation, Parks and Open Space Master Plan.

Finance Director Crystil Wooldridge reviewed the city’s second quarter financial report for 2020. She said city revenues are being impacted by the COVID-19 pandemic, primarily in taxes collected from gambling and city-issued fines or forfeitures.

Wooldridge said gambling tax revenues were down significantly due to business closures in March following Governor Inslee’s stay home proclamation. Local casinos are currently open at limited capacity, and she anticipated that the loss in tax revenue will continue through the end of the year. Besides gambling, the city has also seen a decline in income from its admissions tax. with movie theatres closed during the pandemic.

The city’s fines and forfeitures were at only 20 percent of yearly budget projections as reduced traffic has resulted in fewer citations issued. There are also fewer court proceedings as hearings have shifted to an online format, she said.

Meanwhile the city’s recreation fund revenues have been slammed by the pandemic. The program had a negative fund balance of close to $430,000 at the end of second quarter because of facility closures and cancellations impacting fitness and youth programs. Wooldridge said the city is projecting a loss of approximately $1.5 million in yearly operating revenues for the recreation fund.

“This is definitely the program that is being hit the hardest, in regards to revenue loss, because of the closure they have limited programs,” she said. Some of the losses will be recovered through CARES Act funds, but the remainder will have to come from the city’s general or reserves funds.

Wooldridge told the council that it is still to be determined how pandemic-related revenue shortfalls will affect the city’s six-year financial forecast.

She said tha property taxes are not seeing a decline and sales tax income has experienced a slight increase, which she thought was the result of online shopping.

City projections currently assume that local businesses will still be operating under Phase 2 conditions of Governor Inslee’s Safe Start guidance plan through the remainder of 2020 and are then projecting to be in Phase 3 or 4 by 2021, where things could “start to go back to normal,” Wooldridge said. “But I don’t think anybody really knows…it’s just our best guess at this point.”

She also warned councilmembers that the city’s six-year financial forecast and street construction fund may be affected by the legal outcome of Initiative 976. Voters approved the ballot measure last year to reduce the taxes for car licensing tabs, but it has not taken effect due to legal challenges related to how it would affect transportation budgets. It is currently in appeals court and Wooldridge said the city could have to refund approximately $360,000 if the initiative takes effect.

City Manager Scott Hugill reviewed the city’s existing financial policies in preparation for the 2021-22 biennial budget. They help to provide core services for the community and address long-term goals by ensuring that residents’ tax dollars are being used openly, efficiently and effectively without broad fluctuations.

“These have really played out during this pandemic,” he said. “You’ve been able to maintain those core services while still going forward with the Town Center, marketing, Main Street, the Civic Campus; all of those are due to your adherence to your financial policies.”  The policies maintain a big-picture view of finances and issues while also helping the city to adapt to changes as they occur, he said.

Recreation and Parks Director Jeff Betz updated the council about upcoming survey efforts that will help inform the department’s Recreation, Parks and Open Space (RPOS) Master Plan. The information gathered from the survey and comments received from other public outreach efforts — including stakeholder meetings and an online public open house — will help to determine what types of parks, facilities and programs are needed for Mountlake Terrace in the future.

The city will soon conduct a random, statistically-valid survey that will be mailed to approximately 2,500 households near the end of September, he said. The materials will include completion instructions and a pre-addressed return envelope. Participants will also have the option to complete it online using a unique code printed on the survey.

All city residents will also be able to access the survey’s electronic format, but their responses would not be included as part of the statistically valid surveys. City staff plan to post signs with the online access codes at every park and facility to encourage more participation among residents.

The process is in its beginning stages and, “most of the public information gathering will happen in the next six months,” Betz said. Councilmember Erin Murray said that she would like the city to explore including paid postage for the survey’s pre-addressed return envelopes, which Betz indicated he would check into.

— By Nathan Blackwell