Difficult financial situations are essentially routine in the current economy and the Covington City Council faces a particularly tough one when it comes to funding its Community Park project.

Among the options on the table for the city is to raise its utility tax a half percent, from 5.5 percent to 6 percent, in order to bring in additional cash to the city’s coffers. The city will host a public hearing on the topic at 6 p.m. on Nov. 8 and will vote on an ordinance Nov. 22.

At the Oct. 25 City Council meeting, Covington City Manager Derek Matheson explained the situation to the members.

“I reminded them that the draft 2012 budget is balanced, which means we can maintain our existing services,” Matheson said. “But, we are not able to build, operate or maintain Covington Community Park unless there is new revenue or they reduce existing services.”

Matheson said he understood that people may wonder how the city had gotten so far on the park project but not have it fully funded.

“I told the council that the answer is as simple as it is frustrating,” he said. “When we did our May financial forecast it appeared we could absorb the maintenance costs into our existing budget… We all saw how bad the economy was over the summer so by the time we did our October forecast we saw that was no longer possible.”

In order for the council to make an informed decision about its next course of action, Matheson said, he gave them a handful of reasons to continue with the project as well as reasons not to keep going at this point.

Matheson said among the reasons to move forward has been a stated desire by the community during a parks and open spaces master plan process in 2009 to have more parks in the city.

“They specifically mentioned athletic fields, trails and community parks, which Covington Community Park is all three,” he said. “We also noted that there are not enough athletic fields in the city, there’s no city-owned, city-maintained property for public events.”

Covington Parks and Recreation Director Scott Thomas said the city becomes “acutely aware of what a problem that can be when we had to shuffle around Covington Days” in July because the usual site, Covington MultiCare, was unavailable due to construction.

And there’s the fact Thomas “has worked hard over the past two years to put together over $1.5 million in grants from the state and King County,” the city manager stated.

Thomas stated, “The single largest piece of that money survived two legislative sessions. It will not survive a third session.”

That $1.5 million covers a significant chunk of the project’s $2.2 million price tag.

“If we don’t move forward with the project, that money goes away,” Matheson said. “With the condition of the state and county budgets today, who knows when that money will be available. The city has also invested $600,000 thus far to master plan and design the park.”

The city worked hard in its efforts to find money, Thomas said.

“We looked at a wide range of options and decided whether they were good or bad options,” he said. “We were thorough in thinking about where that revenue would come from.”

Still, there are some reasons which could lead the council to put the project on the back burner for now.

“One is that the project budget is still in development and we’re still in the design phase and numbers can change as information comes in,” Matheson said. “While $200,000 is what we need in city funds now, that number can change over time. The second reason is we’re in a struggling economy and it’s a difficult time to talk about taxes.”

The council voted 6-1 to have staff bring back an ordinance to increase the utility tax by half a percent, the city manager noted, as well as asking staff to initiate a public outreach strategy.

“The third reason, which was most important to the council member who voted against the motion, if the council uses the utility tax for the park, the last half percent, then it’s not available in the future for forecasted budget shortfalls,” Matheson said. “We also talked to them about revenue options. We have the last half percent of the utility tax the council can impose without a public vote. That would generate $135,000 next year and $180,000 a year after that. We estimate it would cost a typical family about $2 a month. We talked about a $20 per year vehicle license fee for street maintenance. It would raise between $180,000 and $280,000 per year. It would cost the average family $1.67 per month. Since more families have more than one vehicle this would have a greater impact than the utility tax.”

Another option the city could consider would be to reduce the budget by $185,000 to $200,000 a year.

“But, the council recognized we’ve already cut millions out of our budget and cut staff by 20 percent,” Matheson said. “It’s getting difficult to impossible to make more cuts without touching police.”

Or, the council could have taken no action, which would have stopped the project’s progress.

At this point, though, the utility tax increase appears the most viable option and city staff is working on educating residents through newsletters, information on the city’s website, the public hearing set for Nov. 8, as well as gathering input via Facebook and a contact form online.

“We want to hear what the public has to say,” Matheson said. “We will share that (with the council) on Nov. 22, the night they’re scheduled to vote on the utility tax motion.”

If the City Council does vote to increase the utility tax on Nov. 22, collection would begin no sooner than 60 days after approval, though the city will likely give the utilities an additional 30 days. That’s why the amount collected for the first year would be lower, Matheson said, because the city wouldn’t take in the increased amount at the start of the calendar year.

Collection in 2012, Matheson said, would go toward construction then 2013 and beyond would go to the maintenance of the park.

“Even if the council approves the utility tax increase, there are other things that need to happen to build the park,” he said. “In the design phase we can’t have any more cost increases. Even if we don’t have any cost increases in the design phase, the bids have to come back within the budget.”

Then if the stars align, Thomas said, “we’ll go to bid in the first half of next year and we’ll construct in the second half of next year. The first phase, which is primarily a full size grass soccer field, parking lot and almost a mile of trail system.”

Covington has had a utility tax in place since 2007.