All of this has had a profound impact here in Snohomish County. Unemployment reached the highest level it has been in 30 years, and continues today to be far too high. Families have lost jobs, have lost homes, have lost savings. And just as the families of this county have had to adjust to hard times, so has county government.

Two years ago when the Council adopted the budget it was during a time of crisis. No one knew how far the economy would fall or how quickly it would recover. The budget the Council received was based on the economic situation in August of 2008. By November the situation had completely changed.

Councilmember Dave Somers, who was then Chair of the Council, led the Council's response to this crisis. Ultimately, it was discovered that revenues fell by 8 and a half percent, a total of $17.7 million dollars. The Council had roughly seven weeks to adjust to this new reality.

A variety of steps were taken. The Council instituted a hiring freeze, negotiated furloughs for most General Fund county employees, eliminated 93 positions from the General Fund, provided no step increases for management/exempt employees, and cut expenditures significantly.

 A year ago, when the 2010 budget was being considered, the Council faced similar tough decisions. The proposed budget included an assumption of 15 days of furloughs for county employees. No union agreed to the furloughs. Former Chair Mike Cooper led the Council in making decisions that included furloughs for all management/exempt and non-union employees, a continuation of the hiring freeze, no COLA for most employees, and expenditures, which mean services to citizens, were cut again.

The cuts to county services and expenditures in the last few years are real. Since 2008 234 positions have been eliminated within the General Fund. Within the other funds another 174 positions were cut. All General Fund departments have shared in this pain. The Council has eliminated 4.4 FTEs from its relatively small staff. Two employees will be laid off this year.

Expenditures have also been slashed. The 2009 budget presented to the Council assumed General Fund expenditures of nearly $215 million. The 2011 budget adopted today has expenditures of just over $204 million. The actual cuts in services are significantly deeper than this. To continue to provide the same level of services in 2011 that we provided in 2008 would require nearly $240 million dollars, an increase of over $35,000,000.

The Council's actions in the 2009 and 2010 budgets set the stage for Snohomish County to get back on a stable path. The need for permanent and deeper cuts was anticipated all year. Vice Chair Somers and I began meeting with the other elected officials early this year, working together as a county to identify solutions to our problems.

As a result the budget before us this year is in a number of ways easier. By making hard decisions in the last two years we have avoided having to make as many difficult choices this year. This budget eliminates roughly 170 positions. Because we have planned ahead and put a hiring freeze in place, nearly all of these positions are already vacant. 

With the adoption of this budget our reserves are back to pre-recession levels. Our operating expenditures will be at a sustainable level, one that we can continue without a never-ending cycle of budget cuts. By working together we have put Snohomish County in far stronger position than our neighbors to the south, King County and the city of Seattle.

But there are caveats to this positive picture. Using the same assumptions as the Executive, wages are projected to grow no more than two percent per year through 2016 and employee benefits are projected to grow no more than 7.4% annually over the same period. Higher wage increases or more costly medical benefits will likely mean more budget cuts. 

The assumptions for revenue growth in future years used by both the Council and Executive are based on a modest economic recovery as projected by state and regional economists. But should they prove wrong we will once again face difficulties.

We know that there will be cuts coming from the state and federal government. Those cuts will be beyond our control and may impact our revenues and the services we are able to provide to county residents.

One of the most significant financial dangers Snohomish County faces in future years is the lack of adequate provisions for capital expenditures. Ultimately, if not planned for, the need to fund technology and basic building maintenance and repairs will lead to additional budget cuts.

Any way you look at it, services will be at a lower level than in past years. We need to recognize and accept that restoring service levels to what was provided even two years ago is far in the future.

Public safety is our most important priority. But with public safety making up 3/4s of the general fund budget it is impossible to not have some cuts here as well. For that reason, this budget includes targeted, precise, and small adjustments to key public safety services for our citizens.

Responding to E-911 emergency calls has to be the Sheriff's first priority. Yet in the long run we cannot effectively serve our citizens without the ability to focus on specific crime problems. The Directed Patrol unit of the Sheriff has provided that ability. The Directed Patrol unit focuses on the Most Harmful Criminals Program, which identifies and goes after the worst of the worst. In 2008 the unit made 1140 arrests, of which 584 were for felonies.

Due to budget cuts the number of officers assigned to the Directed Patrol unit has declined since January 2009. The unit was scheduled to be completely eliminated in 2011. This budget preserves three positions, providing the ability to continue to focus on hardened criminals and creating a base to possibly expand the unit in the future.

In addition, Sheriff John Lovick and his staff have done outstanding work re-organizing their budget. As a result, 3 and a half more deputy jobs will be saved. Altogether, this budget adds back in 6 and a half deputies that had been on the chopping block.

Identify theft is a growing crime that creates extreme hardship for the victim. At the same time, the complexity of these cases makes them very difficult to prosecute. Prosecutor Mark Roe had created a dedicated unit to specialize in prosecuting those who prey on people by stealing their identities. Budget cuts led to the elimination of this unit. This budget provides for one Deputy Prosecutor who can concentrate on identify theft.

While arresting and prosecuting criminals is of prime importance, we must never forget the victims of crimes. For that reason this budget adds one position to the Clerk's office to focus on the collection of restitution payments from convicted criminals. Victims should receive roughly $25,000 in restitution with another $5,000 for the states Crime Victims Witness fund. An added benefit will be a reduction in the Prosecutor's workload as criminals pay victims required restitution.

Only five new FTEs are paid for by the General Fund in this budget and all five focus on key public safety priorities.

As mentioned earlier, one of the key dangers to this county's financial stability is the serious underfunding of capital projects. Failure to begin aggressively addressing this problem could easily put us back into a cycle of year after year budget cuts.

Technology funding is the first key capital area I want to address. Technology is essential in the modern world. We cannot meet the needs of our citizens and more effectively and efficiently deliver services without upgrading our technology on a regular basis. This budget provides funding for two crucial technology systems solving a nearly $4 million dollar funding gap.

The first of these systems is vital for public safety. The New World System Project is an exciting step forward in dispatching, managing, and reporting for our deputies. 57 public safety agencies in the county have joined together to implement the system county-wide. It will provide efficiencies for not only the Sheriff's office but also the Prosecutor, the Clerk, the Medical Examiner, and the Courts.

Information will be able to be shared easily and quickly between law enforcement agencies. Citizens will be safer due to faster response times. Deputies will be safer due to better information about the dangerous situations they will be going into.

Similarly, the Proval system, is critical to our Treasurer and Assessor. Failure to collect revenues in Snohomish County would devastate our criminal justice system. Additionally, all other local jurisdictions, from schools to fire districts to cities depend on Snohomish County doing its legally mandated duty. With the adoption of Ordinance 10-108 the Council has guaranteed funding in future years so that there is no question this vital and legally required system can be replaced in a timely manner.

In addition to technology needs, Snohomish County needs to do a better job funding basic maintenance and repair needs. Just like at your home the county needs to plan for roof replacement, replacing old heating systems, and other basic maintenance. When times are tough such maintenance can be put off, but ultimately the work must be done.

By passing Ordinance 10-109 the Council has taken the first step toward providing funding for these projects. In the future when the ending fund balance is more than anticipated one half of it will go to a special fund dedicated toward capital.  In this way we will continue to increase our reserves while providing for vital capital needs that have been neglected in the last few years.

The final area of capital that is critically underfunded is transportation. Transportation has no impact on the General Fund, but traffic congestion and the lack of safe pedestrian pathways for school children are vital concerns of our citizens. And yet today we face a transportation funding crisis.

Snohomish County is required under the Growth Management Act to evaluate the transportation projects needed to accommodate growth. The Council was told this fall that in order to fund the projects that must be completed by 2025 Snohomish County will need to find an additional $263 million dollars.

Last week the Council took a first step in addressing this pressing need. A public hearing was held on the possible formation of a Transportation Benefit District. Plans were discussed to take advantage of low interest rates and a competitive bid environment to fast track projects and deliver congestion relief years earlier than planned. The Executive and Council used a similar plan in the past through the Enhanced Community Infrastructure Development Initiative.

If we can implement this approach we can do projects quicker, at a lower price, and create badly needed jobs in our community. The Council will continue to work with the Executive on this possible option in 2011. But even if implemented it will still leave a hole in our transportation budget.

2011 is only the first step in addressing the county's critical capital needs. We need to deal with our capital shortfalls in a comprehensive and transparent way. We need to be honest with our citizens about what the problems are, what the solutions may be, and about the consequences of failure.

Included in this budget is the adoption of a budget note calling for a cooperative effort by the Executive and Council to do just that. The Executive will provide the Council with a draft Capital/Infrastructure Business Plan for the next six years by March 31^st.

The plan will identify mission critical technology needs, what funding is available, and options for how the county can continue to provide vital services without the completion of these projects.

It will identify recommended funding options to make up the shortfall in transportation funding. If these options are not recommended, it will identify which projects will not be funded. And it will provide details on the impacts to traffic congestion and land use without these projects.

Finally, the plan will provide an analysis of the likelihood that the funding for other capital needs included in the six year capital plan will actually be available. It will provide a prioritized list of these projects and identify options for how the county will deliver services if individual projects are not completed.

Following receipt of the draft plan the Council will work with the Executive to adopt a final plan for the future. This transparent process, which will allow the public to be fully informed, will make it possible for the county to work together with citizens for a future we can all support.

The last two years have been very difficult for our citizens and our employees. I want to thank all our employees for their efforts to continue to provide top-notch services to our citizens with ever decreasing resources. I also want to especially thank all staff, whether Council, Executive, or those from other elected departments, for their hard work that has made this budget possible.

By working together we have made Snohomish County financially sustainable in ways that other large Puget Sound jurisdictions are not. To stay on this path we must continue to exercise fiscal discipline and to take concrete steps to address our long term capital needs. With this budget we take major steps to do that and have set the stage for the future.