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Meeting Summary
Meeting 9 - July 17, 2003

Members:
Richard Derham
Mark Endresen
Dave Gering
Steve Goldblatt 
Arun Jhaveri
Sharon Maeda
Jim Montgomery
Bill Ptacek
Steve Williamson   

Consulting Team:
Berk & Associates, 206-324-8760
Marty Wine, Senior Associate
Brian Murphy, Associate

Council Staff:
David deCourcy, Council Chief of Staff, 296-0343
Scott White, Council Staff, 296-0324
Gennevie Cook, Committee Assistant, 205-5079

The Commission on Governance meeting was called to order at 2:05 p.m. in the Maynard Conference Room, 2^nd Floor, King County Administration Building, Seattle, Washington by Co-Chair Steve Goldblatt.

Commission members present:  Richard Derham, Mark Endresen, Dave Gering, Steve Goldblatt, Arun Jhaveri, Sharon Maeda, Jim Montgomery

Absent:  Bill Ptacek and Steve Williamson

Guests present:  John Warner, co-chair, King County Budget Advisory Task Force, Steve Call and Karen Reed, King County Office of Management and Budget.

Audience members signed in:  Anthony Hemstad, City of Maple Valley

1.  Approval of Meeting Summary

The June 7, 2003 meeting summary was approved.  It was suggested that meeting numbers be included at the top of the first page of each summary.  Motion to approve the summary:  Jim Montgomery; Second:  Mark Endresen.

2.  Recommendations of King County Executive’s Budget Advisory Task Force

John Warner, BATF Co-Chair; Steve Call, Director, King County Office of Management and Budget; and Karen Reed, Lead Staff, King County Office of Management and Budget gave a presentation of high-level themes, conclusions, and recommendations from the BATF work.  Links to the Executive Summary of the BATF report and recommendations can be found on www.metrokc.gov/exec/batf/rpt_0603_ExecSum.pdf.  Presenters responded to Commission questions listed below (questions listed in italics):

Are level of service decisions mandated or determined by the County?  In some cases they are determined by outside agencies or bodies, but in many cases they are self-determined.  The role and functions of the Sheriff, for example, are mandated, but the level at which those services are provided is not.

Are mandated services funded solely by King County?  There may be some level of state or federal support as well.  Superior Court and Public Defender, for example, receive small amount of funding from Washington State.  Public health receives more federal funds and less CX dollars.

Discussion related to the BATF findings related to the “urban subsidy”:

Given the deliberate concentration of growth in cities under GMA, why shouldn’t an urban subsidy of unincorporated areas be expected?  Unincorporated areas are not sufficiently developed to have the tax base to support urban service levels, by definition and by virtue of cities annexing the most urbanized areas.  The issue is not that there is a subsidy, but its amount and the fact that there is a residential-to-residential subsidy.  If annexed, these areas would likely continue to be subsidized – by cities instead of the County. Cities are better equipped to provide urban levels of service, given greater taxing authority.

If all areas west of the Urban Growth Boundary were incorporated, would there be a sufficient tax base in unincorporated King County to support mandated services?  It would be close, but because of Initiative 747, it would likely not be sustainable, particularly during inflationary periods.

Is the $42 million urban subsidy estimated by the BATF, gross or net of tax on consumer spending in incorporated areas by unincorporated area residents?  It is gross. However, unincorporated area residents access the majority of services they utilize in incorporated areas of the County, as that is where those services are available. 

In the past the County had difficulty spending its full road budget (60% of local County revenues are allocated to roads by established Council policy).  That is no longer the case:  the County has substantial unmet unincorporated area road needs and a great deal of delayed maintenance.  Therefore it’s not just a simple solution to shift unincorporated area road fund dollars to other County needs.

Are Potential Annexation Areas to be annexed very soon?  No, but the BATF recommends moving ahead quickly, accomplishing the annexations within two to three years.  This will be difficult as annexation of each PAA long-term probably results in a net revenue loss to the annexing city.  Losses would range from insignificant to significant.

What guarantee is there that King County costs will decrease with annexation of unincorporated areas?  This needs to be closely monitored.  If land is annexed but costs do not decrease, more harm than good will have been done as the County will have lost the tax base.  Does the high level of fixed costs indicate that reducing County population relatively marginally will not have a significant impact on County costs?  Few costs are truly fixed, and we need to push hard to find cost savings.

Did the BATF look at County inefficiencies in terms of personnel practices?  No:  focus was on systems and process efficiencies. 

Did the BATF find opportunities for Information Technology solutions to better coordinate functionally and geographically widespread County departments?  A BATF recommendation that has been conveyed verbally, but is not in the written report, is that the County should solicit recommendations on such solutions from local high-technology firms.

Did the BATF find financial transparency and widespread understanding of actual costs within the County?  This was recognized as a challenge.  Much of the County, including the CX fund, is on a 25-year old financial system which does not allow the same analysis more modern systems permit.  Approximately one-third of the County is on a more modern Oracle system.  As the County is a large, diverse organization, change cannot simply come from by directive from the top, but will require effort within each department.

Did the BATF look at a measure of the distribution of the County’s management hierarchy such as a management-to-employee ratio? The County has these figures, but care should be taken as such figures may be misleading.  Good information is difficult to obtain, as each department may define and track staffing levels and roles differently.

Does the County engage in multi-union bargaining?  Benefits for all County employees were jointly negotiated three years ago.  More of this could be done.

Can the County make temporary payments to cities which annex unincorporated areas and take over services formerly paid for by the County?  Yes:  this was more possible in the past, when the County’s budget allowed for it, so a small amount of funding is being suggested.

What is the status of State legislation related to annexation?  A new mechanism has been created which would allow annexation of an unincorporated “island” with an interlocal agreement between the County and a city.  An island is defined as any area bound by incorporated areas along at least 60% of its length, which includes almost all of King County’s unincorporated areas.  It is unlikely for cities to want to absorb populations which do not wish to incorporate, however.  This legislation was championed by Pierce County and the Washington State Association of Counties.

What is the status of State legislation related to a County sales tax?  There are a wide range of opponents to this, including private sector interests.  The outcome is unclear.

Why did the effort by the Regional Finance and Governance (1996-1998) end in failure?  Why should we believe this effort will result differently?  The situation is much worse now, and cities and the County are more desperate for solutions.  One difference is that the County has changed its policy, now counting sales tax as local revenue, and cities acknowledge the urban subsidy and agree that something needs to be done about it. 

3.  Prioritization Exercise for Focus – County Services and Departments

[Note:  Agenda item 3 (King County Government, past Charter Reviews, and Budget) was passed over due to time considerations.  Commission members were encouraged to review the materials, contained in the Meeting 8 packet, and raise questions and comments in future meetings.]

Marty Wine introduced an exercise designed to strategically focus Commission efforts during Phase 1 (what services should the County provide) and 2 (how and at what service level should these services be provided?).  Ms. Wine asked Commission members to prioritize which portions of the County budget they would like to spend time researching and discussing to answer Phase 1 and 2 questions.  Index cards representing County services and departments were taped to the wall listing the amount appropriated in 2003 and from which fund; the number of FTEs; the percent the appropriation unit represents of all County funds; and whether the service had been identified through BATF or other sources as mandated or discretionary.  Commission members selected the following County services or departments and related questions for further investigation.

‘Role and function’ indicates the Commission would like to learn more general information about the service of department.  ‘Scale of budget’ indicates that given the percent of overall budget dedicated to the service or department in question, the Commission identified it as worthwhile investigating further.

4.  Administrative Items

     Report of Activities.  A copy of the Commission’s first Quarterly Report of Activities (included in the meeting packet) has been sent to the King County Council and the Commission’s distribution list.  Future communications will be brought before the entire Commission before release.

New Commission member.  On July 14, the County Council approved the Executive’s appointee, Kathleen Royer, President of the West Hill Unincorporated Area Community Council, as a new Commission member on Monday July 14.  At the hearing, the Selection Committee was still considering other individuals, and did not have a second nominee to present.  The co-chairs and Marty will contact Kathleen to welcome her and set time for a briefing.

Upcoming meetings.  Marty Wine directed the Commission’s attention to the Draft Schedule and Agenda Planner (on purple pages in meeting packet).  This document aligns the Commission’s Work Plan with the meetings scheduled, and can be used as reference to see topics scheduled for future meetings. 

The next Commission meeting will be held on July 31, from 2-5 p.m. in the Lydia-Catherine room.  The Commission will hear from the cities of Seattle, Bellevue, and the Suburban Cities Association, as well as the Unincorporated Area Councils in a separate portion of the meeting.  Staff will report back to the Commission in follow-up to the prioritization exercise done during this meeting.  Dave Gering will chair the July 31 meeting.

Meeting was adjourned at 5:00.