A widening projected shortfall in the City of Tacoma’s budget – at current estimates, $36 million – has municipal officials now recommending that more than 90 city jobs be left vacant by year’s end.
Still, the city’s manager and top financial officer aren’t mentioning the words “layoffs” or “hiring freeze” just yet, suggesting the City Council can seek to bridge Tacoma’s broadening budget gap in other ways.
“We would not be laying people off to create vacancies,” City Manager Eric Anderson said Thursday. “What we’re doing is making very careful judgments as we go along.”
That includes determining if jobs left vacant by retirements or resignations truly need to be filled, can be left open until the economy turns or should be eliminated altogether, Anderson said.
“If we start eliminating people, we start reducing services – and we’re not looking to do that,” Anderson said. “But we’re not just holding positions vacant, either. If we can do without it, we’ll get rid of it. If it’s a position we need for delivering city services, we’re filling it.”
Although no city department would be immune from the prospective job vacancies, the city should avoid leaving any open police and fire positions, said Councilman Mike Lonergan.
“We need to be selective in deciding where those staff reductions occur,” said Lonergan, who chairs the council’s finance committee.
Last week, Anderson and city finance director Bob Biles presented the latest 2009-2010 budget projections, based on actual revenues garnered through the first half of this year. The presentation showed revenues about $10 million lower than expected through the first two quarters, including $4.3 million less in utility taxes; $2.4 million less in sales taxes; and more than $1 million less in property taxes.
So far, the city has avoided some of the more extreme cuts the recession has forced on the state, Pierce County and school districts. But the revenue shortfalls represent a significant turn for the worse in the city’s ongoing monitoring of its two-year budget, Anderson said. Sales tax revenues have tanked 16 percent since 2007, while the current utility revenues are 40 percent less than expected.
“The drop in revenue has been more steep than we originally anticipated,” Anderson said.
When factored into earlier projections and current and expected municipal expenditures, the city now faces a $36 million hole in its two-year $440 million general fund – what Anderson called the most “extreme” shortfall projected since city officials began monitoring the current budget forecast late last year.
Along the way, city officials have been actively identifying ways to keep pace as the projected shortfall widens. The latest recommendations to help fill at least part of that anticipated gap call for an additional $14.5 million in spending cuts and transfers from contingency budgets. Those cuts would bolster $11.7 million of cutbacks recommended after first quarter revenue figures were released in late April.
Among the latest recommendations: Transferring $2 million to the general fund from the City Council’s contingency fund, which now has a $3.1 million balance; reducing by another $2.4 million (to a total of $4.4 million) contributions to the 2010 health insurance fund; eliminating a $2 million “overtime mitigation” fund created to cover expected police and fire service costs due to the closure of the Murray Morgan Bridge; and deferring $551,000 in capital improvements slated for the Fire Department in 2010.
By far the biggest component of the recommended spending cuts is leaving an additional 46 city positions unfilled, for a projected savings of about $4.6 million. Those vacancies come on top of 45 positions already recommended to be left unfilled by the end of 2009, bringing the city’s job vacancy target to 91.
“Certainly, we don’t like the idea of reducing staff because we don’t have a lot of fat in our staff,” Lonergan said. “But that’s what we have to do.”
When asked whether that many positions of the city’s roughly 1,660-member work force are typically vacated each year through attrition – what city officials are hoping for – Biles couldn’t say.
“But I think it’s fair to say, given what’s going on with our economy, what will happen in the future may not follow past trends,” he added. “I mean, I’ve never been in a position in my career to see sales tax revenues decline by 16 percent over two years, either.”
All cost savings recommended to date only make up about $26 million of the projected $36 million budget hole, leaving to council members the tough decisions of how to make up the final $10 million gap at year’s end, should projections hold.
“At this point, we don’t foresee any, but if there is anything that impacts services to the community, that’s a policy decision that will be brought before the council,” Biles said.
Anderson cautioned that the latest budget projections are merely that – projections. Economic changes will alter the forecast, he said.
“These numbers are actually on the conservative side,” added Lonergan. “There are positive signs that the economy is improving, so I think the $10 million (gap) is something we can wait on for the next quarterly report.”
The next budget review, including an update on third quarter revenues, is scheduled for late October.
Lewis Kamb: 253-597-8542
lewis.kamb@thenewstribune.com
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