The City of Puyallup is facing something uncommon among local municipalities this year – a healthy budget forecast.
Pierce County’s third-largest city will not have to resort to layoffs or dip into its reserve fund to cope with declining revenues, according to the 2009-2010 budget the City Council approved Tuesday.
The city of about 37,000 residents is choosing to cut its total number of authorized staff positions by three. But City Manager Gary McLean said that still leaves room to hire 15 jobs that have gone unfilled in 2008.
In fact, the city’s current 355 employees will be eligible for raises, McLean said. The payroll budget for 2009 is nearly $2 million higher than it was in 2008.
“I am very proud of how we have done in 2008,” said McLean, who is finishing his first year as Puyallup’s city manager. “By anyone’s evaluation, I think ours has been a tremendous success in hard economic times.”
Other cities, such as Lakewood, Orting, University Place and Gig Harbor, are looking at layoffs and wage freezes to make ends meet. The City of Tacoma is tapping $13.9 million from savings to get through 2009 and 2010.
Meanwhile, Puyallup’s general fund budget for 2009 improves slightly upon this year.
The city plans to spend $58.4 million next year out of its general fund – $924,420 more than it budgeted in 2008. It also will increase its reserves from 8 percent to 12 percent.
Mayor Don Malloy said the city has shown fiscal responsibility by saving money this year and conservatively projecting revenues for the next two years.
“I think we’ve been very careful,” Malloy said. “We’re prepared.”
That’s not to say Puyallup has been immune to the revenue shortfalls plaguing its neighbors. Officials are projecting that 2008 sales tax revenues will be $2.9 million less than expected, and overall revenues will come in at $1.5 million less.
Traffic impact fees are also expected to fall significantly.
But back in April, the City Council asked staff to set aside $500,000 to prepare for an economic downturn.
McLean said staff thought it prudent to go even further, spending $3.5 million less than the 2008 budget. The result: a total savings of $2 million over the course of the year, even with the decline in revenues.
“Because we started hitting the brakes as early as April, we’re able to report a favorable balance,” McLean said. “You may not see growth, but we’re not negative.”
What got cut in the process? McLean said mostly non-essential facilities upgrades. The city spent nearly $1 million less on general fund capital improvements than it had budgeted for in 2008.
“We didn’t refurbish certain office spaces,” he said. “We didn’t put new carpet in library meeting rooms – things like that.”
Even so, the city is investing in some capital improvements during the next two years, including three sewer projects totaling $10.1 million and $12 million toward extending Shaw Road.
The city gained some ground by letting some positions sit vacant a few months, saving about $1 million in payroll costs. Positions were filled eventually, however, and the city is ending the year with about the same number of vacancies that it had in January, McLean said.
Another boost came from the red light camera program the city began earlier this year, which helped it collect $1.2 million more in citation revenues than it budgeted. That helped offset 2008’s decline in sales tax income.
“It certainly helps,” McLean said. “That puts more money in our general fund to spend on traffic and congestion relief.”
Puyallup plans to install three more cameras in the upcoming biennium, and expects traffic camera enforcement revenues to bring in about $2.1 million a year.
It’s also expecting to receive at least $4.5 million in additional sales and development revenues from the construction of Good Samaritan Hospital’s new Patient Care Tower.
McLean said the city used conservative revenue projections to create its budgets for 2009 and 2010, so finances will be healthy even if economic activity decreases by 5 percent.
The city plans to save an additional $1.2 million in 2009 and $2.4 million in 2010.
Councilman George Dill said continued vigilance will be key in keeping the city out of debt the next two years.
“We’re doing OK now, but we’re gonna have to keep our eye on our income and expenditures.,” Dill said. “It’s not the time when we can afford to go out and spend.”
Melissa Santos: 253-552-7058
BY THE NUMBERS
Puyallup’s finances look to be holding strong the next few years, despite lower than projected revenues.
2008 (budgeted)2008 (actual)20092010
General fund expenditures$57.7 million$54.2 million$58.4 million$60.5 million
General fund reserve$4.0 million, 8%$6.0 million, 12.4%$6.3 million, 12.1%$6.2 million, 11.6%
Number of jobs authorized N/A373370377
Sales tax revenues$18.5 million$15.7 million$16.4 million$17.5 million
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