The Tacoma City Council on Tuesday signed off on the city manager’s plan to close a $12 million budget gap this year in part by tapping reserves set aside for liability claims and internal technology services.
City Manager T.C. Broadnax recommended last week that the city spend nearly $5 million from the special internal services fund to help balance the city’s 2011-12 budget.
The fund is a shared account into which the city, Tacoma Public Utilities and general government utilities contribute payments for overhead and administrative costs.
A recent analysis found that reserves meant for technology, health care, life insurance and liability claims total more than $30 million – about $12 million in excess of recommended levels, Broadnax said.
Council members gave the go-ahead to the special fund transfer Tuesday. City officials say the reserves to be used will come from general government contributions – not from public utilities contributions, which must be spent only for utility purposes.
The city is using a combination of federal grants, tax increases already passed by the council, unexpected revenues and the elimination of five vacant positions to make up the shortfall’s remaining $7 million.
City officials are separately working on a plan for the 2013-14 budget, which is projected to have a $60 million to $65 million shortfall.
Staff report
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