Part I: Berk Report On Annexation Indicates Annexation Of North Highline Would “Pencil Out” For Burien

by Ralph Nichols

When Seattle backed away from pursuing annexation of North Highline earlier this year, Burien looked once again toward bringing the remaining unincorporated area into the city.

Several Burien City Council members have said in the months since then that they will likely support annexation of North Highline – “if the numbers pencil out.”

While it will take a while before the financial bottom line for Burien is determined, a just-completed study of a possible annexation of North Highline indicates the numbers are there.

The study by Berk Associates was presented to council members immediately before their Aug. 1 meeting. It is available online.

According to an overview of the study, the financial analysis addressed three “key questions”:

  • “Does annexation of the area make it more or less challenging for the City to balance its budget over time?”
  • “What is the effect of the annexation sales tax credit on both the short- and long-term fiscal impact of annexation?”
  • “What is the scale of needs for infrastructure in the area?”

Berk’s findings determined:

“The current City has a present-day and structural fiscal challenge.”

“The annexation sales tax credit would cover the City’s incremental cost of annexation.”

“The annexation sales tax credit provides the City with greater flexibility to manage expected future fiscal challenges.”

“Over the long-term, annexation would be a fiscally NEUTRAL proposition to the City.”

“Annexation will bring additional capital facility needs and revenues.”

The council will discuss the Berk study on Aug. 15, and then review it in-depth at a special study session on Aug. 22.

City Manager Mike Martin told the B-Town Blog Thursday the report “confirms the fact that an annexation would be right side up financially.

“I think the question that everyone will want answered is, how can this make financial sense for us and not for the city of Seattle? It’s a legitimate question that needs to be explained.”

Monday’s City Council Discussion

When the issue came before the city council at Monday night’s meeting, Councilman Jack Block Jr., who has indicated a general interest in annexing the area, again said he is “concerned about the speed” at which the question is being considered.

“We need to give people time to catch up … I’m not an advocate of procrastination, but they need time to study” the issue.

But, said Councilman Gerald Robison, “this is an important enough decision to discuss it and make a decision. We owe it to our citizens not to delay.” Later, he added, “At some point we have to make a decision.”

“I don’t understand how this council is way ahead of the citizens,” observed Mayor Joan McGilton. “We have had no formal discussion. We have had no financial report. The council is at the same place as the community.

“We’ve got to see the numbers before we make a decision. We’re at that point now … for a discussion.”

Councilman Gordon Shaw noted that “no doubt the community will be engaged on this issue. Even if they don’t agree with the decision, they have to be comfortable that we’ve covered all aspects. We need to work until we get all the issues out.”

Block agreed that the report should not be allowed to gather dust, and it’s time “to start studying” the document.

Seattle, Burien Differences

In his B-Town Blog interview, Martin said differences in the way Seattle and Burien city governments operate help explain why one city apparently can’t afford annexing North Highline, while the other may be able to do so.

The Seattle City Council received a report from the mayor’s budget office in January, stating financial considerations would prohibit that city from annexing the area for a year or two.

In March, the Seattle City Council backed away from annexation, indicating it would not block Burien if the city decided to move forward.

This two-step resulted from a compromise Burien offered Seattle over a year before the city began the process of annexing “south” North Highline.

Burien told Seattle officials then it would not interfere if that city attempted to annex the remaining unincorporated area. Seattle made no subsequent moves toward doing so.

The primary reason Seattle can’t afford North Highline annexation in the foreseeable future, but it may pencil out for Burien, is that “we have a different way of providing services than Seattle,” Martin continued.

“We don’t provide some services that the city of Seattle provides” – including fire, water and sewer, and library services. “Nor do we provide the same level of human services.”

And Burien “just provides some services more efficiently,” for example, police services, he said.

Martin also acknowledged a “perspective” by some opponents of annexation who suggest the Berk study is slanted to support adding North Highline to the city.

But, he said, “I feel that the report definitely is honest and unvarnished. Some things in there speak to concerns that citizens have. I hope they take time to read it and see if it goes a long woy toward allaying their fears.”

Berk Report: a Quick Look

As if addressing their concerns, Berk’s first finding notes that, like most cities, Burien has had declining revenues during the current recession, and has had a 1 percent a year limit placed on its property tax levy growth by Initiative 747.

“Obviously, the challenge for the City is to maintain adequate levels of service without changing tax and fee policies,” the report says. “Regardless of annexation, the City will have to continue to take steps to bring revenues and costs in line in the form of a balanced budget.”

Still, “the annexation sales tax credit” – $5 million a year from the state for 10 years – “provides additional resources to the City….

“In this sense, annexation provides additional general fund revenue to the City during the ten years of the credit, and buffers the City against its pressing fiscal challenges.”

Therefore, Berk projects, “annexation would be a fiscally neutral proposition for the current City … annexation of the area introduces the same level of operating challenges experienced by the current City….

“In other words, addressing the current City fiscal challenges also addresses the fiscal challenges of the annexation area.”

Coming Next: Reaction and a Closer Look

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