Longview begins long, politically fraught task of restoring financial stability

$100,000 for a squad car and $3,500 for a fire hydrant? Soaring costs, tax limitations put cities from all over the state in financial squeezes; city can't let parks, services deteriorate

Those old Crown Victoria police patrol cars sure were boxy and ugly, but they were reliable, durable, fast, easy to repair and relatively inexpensive, costing the city of Longview about $45,000 fully equipped.

But Ford Motor Co. discontinued the line, and during the past five years or so Longview PD and many other law enforcement agencies switched to Ford SUVs. They handle better than the Crown Vics, but they’re not as durable and they come with a hefty price tag — $100,000.

The cost of police vehicles is just one example of the many ways that inflation is gnawing at city budgets in Longview and across the state. But this is more than supermarket and consumer-type inflation.

Rising costs for fire hydrants and fire engines, employee pay and pickup trucks, water pipe and asphalt, liability insurance and jail and court costs and other goods and services are contributing to a statewide municipal finance crunch. As costs have risen, cities’ ability to raise taxes has been limited by laws and political opposition to tax increases.

The problem has been developing for years. Now, the day of reckoning is at hand. It will present a major topic of legislative debate in Olympia next year. In the long run it will test voters’ willingness to accept more taxes — and city officials’ ability to justify and advocate for them and thoroughly review how the city is is spending money.

“Our revenues have not kept up with inflation,” said Chris Collins, Longview’s assistant city manager.

He said it’s going to take a long time for the city to work out of its financial pinch, but the staff is dedicated to doing so in the least disruptive way possible.

Candice Bock, government relations director for the Association of Washington Cities, said 62 % of 159 city officials the AWC surveyed this fall reported that revenues are falling short of expenses for 2025, up from 32% in 2023.

The officials represent cities with 4.6 million residents, nearly 60% of the state’s population.

“A lot of cities are really struggling to balance their budgets,” Bock said.

According to the survey, “One-time federal (COVID relief) funding is running out, and revenue growth is slowing while inflation continues to impact city costs. City finances moved to the top of the list of concerns identified in our survey, coming in at 86%, up from 62% just two years ago.”

Here are some of the major inflationary factors the city of Longview is contending with:

Liability insurance coverage: Longview’s cost for coverage will rise from $3.4 million for 2023-24 to a projected $5.4 million for 2025-26, a 58%. increase, according to city figures. The city is part of a insurance pool called the Washington Cites Insurance Authority, which has jacked up rates in response to high-cost “nuclear” verdicts and private insurers’ withdrawal from Washington state.

Higher jail and court costs: The city will pay $2.25 million in the 2023-24 biennium — $1 million more than had been budgeted — to jail people convicted of gross misdemeanor drug possession. This is a result of the Legislature’s 2023 “BlakeFix,” which downgraded simple narcotics possession from felony to misdemeanor-level crimes. This shifted many drug cases — and the costs of prosecuting and jailing offenders — from the state to cities. The legislation was a response to a 2021 State Supreme Court ruling declaring parts of the state’s drug possession law unconstitutional.

Labor costs: Labor costs, while projected to drop slightly next year due to budget- related staff cuts, have been rising faster than inflation to bring Longview staff pay up to levels comparable with those of other cites, Collins said. Overall, salaries and benefits will increase from $26.9 million in 2021 to $34.7 million by 2026, a 29% boost over five years. Salaries and benefits account for about 50% of the general fund budget, which pays for police, fire, traffic and other basic community services. Paying comparable salaries helps retain employees, and it is costly to lose them and train replacements, said city spokeswoman Angela Abel.

Equipment and supply costs: The city’s costs for asphalt and other building materials have risen an average of 20% over the past past five years, Collins said. There are some eye-popping outliers. A fire hydrant that cost $1,850 in 2020 now costs $3,500. The per-foot cost of steel water pipe has soared from $18.25 in 2020 to $75. A reservoir roof projected to cost $1.1 million in 2020 ended up costing $3.65 million. The price of a new crew pickup/dump truck is now $95,000, up from $45,000 a decade ago.

Why isn’t Hope Village on this list? The city’s pallet home community for the homeless costs $1.5 million to operate over two years. So far the state has borne those costs and is committed to doing so through July. Afterward, it would become the city’s obligation. However, Collins said “we are fairly confident” that local lawmakers will get state funding for the project renewed.

Note: The costs of a lawsuit alleging that the City Council majority violated the state Open Meetings Act when it fired former City Manager Kris Swanson and picked Jim Duscha as interim manager in Marchlikely won’t be known for months.

Overall, city spending will remain about the same in the next two-year budget cycle as it did for 2023-24. The budget the City Council is expected to approve tonight (December 5) totals $282.7 million in total two-year expenditures, including an operating/general fund budget of $105 million. (The overall budget includes a host of 37 other dedicated funds, including those for water, sewer, waste and recycling, and the Mint Valley Golf Course.)

The city managed to balance the upcoming 2025 and 2026 budget by cutting costs 10%, partly by eliminating 13 staff positions; raising city business and utility taxes; and using $4.6 million in reserves.

Another cost-saving measure is extending the replacement schedule for city vehicles. “Every (city) vehicle is going to have to last an extra three years,” Collins said.

Even with these steps, the city projects it will nearly deplete its cash reserves — now a healthy $18.6 million —by the end of the decade to balance its budget. Its spending for capital and maintenance projects will be severely restricted in the next two years (only 5% of department requests were approved for 2025-26). A $16 million backlog in parks maintenance remains unaddressed. And despite increases in utility rates adopted recently, the city still is not salting away enough money to replace its sewer and water systems as they age.

This path is clearly unsustainable, and it’s partially attributable to voter-approved Initiative 747. The 2001 Tim Eyman-sponsored measure limits increases in property tax levy increases to 1% annually.

Property taxes are one of the three main foundations of municipal finance, along with sales and business taxes. So limiting growth to less than inflation is guaranteed to set governments back. It’s like continually draining a battery but failing to adequately recharge it. Eventually it won’t start the car.

Strong sales tax revenues, a long period of low inflation and trillions of dollars in federal outlays during the COVID pandemic helped put off the day of reckoning, but that day has arrived.

In 2023, a broad group of economists, financial and revenue planners called the Tax Structure Work Group recommended that the Legislature change the annual property tax limit factor to a maximum of 3%, subject to inflation and population growth. Doing so would have increased property tax revenues by 37% statewide had it been in effect in 2017-20, according to the group’s report.

The proposal failed to get traction in the 2024 Legislative session, with Republicans adamantly opposed to the idea. But with Democrats increasing their legislative majorities in the November election, the matter will be back, with the support of the Association of Washington Cities, which represents the city of Longview.

“Until this is fixed at the state level, we are going to be scrambling and having to find creative ways to maintain our levels of service,“ Collins said.

For its part, the city early next year will start a “strategic planning process” to address its financial troubles.

The strategic plan must involve analysis of staffing levels, depreciation of the city’s fleet of vehicles and facilities, funding for streets and parks, deferred maintenance needs and disposition of city assets, according to 2025-26 budget documents that Collins, Acting City Manager Jim Duscha, and acting finance director Jeff Swanson prepared for the City Council.

Success “will require broad community support and commitment to the plan,” the authors note.

”This should have been done a long time ago,” Collins said, even though he’s confident the city is spending wisely.

“If anyone can find any waste, I’m willing to talk to anyone about it,” he said.

Every city department is “doing much more with much less,” Collins said, noting that the street department doubled its “road miles” of work between 2012 and 2019. “I think every department is performing to the maximum capacity” that staff and funding levels allow.

The outcome of the strategic planning process will without a doubt propose taxes for specific purposes — such as a fire truck or parks. The city already collects task-specific sales tax for street projects through its transportation benefit district.

City voters in November approved a 0.1% sales tax to hire three additional police officers. The tax is small — $10 cents on a $100 purchase. But voters rejected an identical tax in 2023 to address the parks maintenance backlog, perhaps because advocates had little time to educate the public about the proposal.

What specific revenue proposals the city pursues may emerge in coming months. On November 14, the council on 6-1 and 6-0 votes appointed a committee of Councilwomen Angie Wean, Kalei LaFave and MaryAlice Wallis to a “revenue committee” to study ways the city can boost revenues. Councilman Erik Halvorson opposed creating the committee and then abstained from voting on its membership. He did not explain why.

Given the council’s conservative bent, it’s almost certain that any new tax proposal will be submitted to voters for approval. (In some cases state law may require electoral approval.)

“Taxes are the price we pay for civilization,” U.S. Supreme Court Justice Oliver Wendell Holmes said in 1904.

If it’s clear that voters have little appetite for new taxes, it’s just as clear that the city will need additional revenues to keep its streets safe, its parks manicured, its streets in good repair, its urban forests healthy and its utility systems functioning.

Those are the quality-of-life assets that attract good employers and economic development and that ultimately make communities and city governments healthy and financially sound. We shouldn’t let them deteriorate. Clinging to a “no new taxes” position at this time would be political grandstanding.

The city is in a financial and political pinch. And the only way to wiggle out is through cooperation, openness and sober analysis that makes the good of city — not some preconceived ideological notion or political ambition — the first priority.