Tacoma's budget gap still large
Two long-anticipated federal grants that were awarded last month to help spare more than 50 Tacoma police and fire jobs won’t cover most of a 2012 budget gap, City Manager T.C. Broadnax said Tuesday.
City budget officials have determined only about $2.5 million of the nearly $13 million in multi-year police and fire grants can be applied this year to help the city trim a remaining $11.8 million general fund shortfall.
That leaves a roughly $9.3 million hole in 2012. Broadnax said he’ll address it after reviewing various city revenue sources over the next few weeks.
“We’re still looking to close that gap,” Broadnax said. “Obviously, we’ll have a balanced budget by the end of the year.”
He made the comments on a day when the City Council was given an upbeat financial report: City revenues are higher than anticipated so far in 2012, while spending is down.
The federal grants guaranteed that the city’s Public Safety Departments will see no layoffs during the awards’ term – two years in the case of the fire department and four years for police.
Broadnax said Tuesday he doesn’t expect any layoffs will be necessary in other departments this year to fix shortfall, but he noted he must assess all options.
He expects to present a plan to the City Council in three to four weeks, he said.
The city manager gave the latest accounting of the 2012 general fund gap Tuesday before interim City Finance Director Jeff Litchfield gave the council an encouraging quarterly budget update.
Litchfield told council members that the city’s actual revenues and spending though the first half of 2012 came in better than projected. Tacoma’s major revenue sources collectively outpaced projections by about 2.2 percent, or $2.1 million. Meantime, city spending came in slightly below estimates – by about $366,000 in all.
“I do want to emphasize that the economy is very delicate,” said Litchfield, who noted that “indicators” still paint a gloomy economic picture. “This is good news, but I think we want to put it in proper perspective.”
Litchfield added that the city’s reserve fund also exceeded projections during the latest quarter by about $3.4 million. That “unreserved fund balance,” now stands at about $21 million – or about 11 percent of this year’s general fund budget. But the reserves are expected to fluctuate before year’s end, Litchfield said.
Councilman Jake Fey described the latest update as “encouraging information.”
“Not out of the woods,” Fey said, “but encouraging.”
Beyond 2012, the challenge facing Tacoma is to deal with what Broadnax has called “structural budget issues” – expected expenses that outpace anticipated revenues. Without radical changes, the city is on track for up to a $65 million general fund shortfall over the next two years and larger deficits beyond that.
To help him prioritize spending for the next city budget, Broadnax has launched a collaborative process that seeks to incorporate input from the public, council and city staff. He plans to present a 2013-14 budget proposal in October.