Tacoma’s cash reserves could be more flush at the end of 2014 than they’ve been in years if the City Council approves a proposed budget change.
By next December, the city could add $12.6 million to its reserves. The amount means the city’s reserve fund will meet the City Council’s goal of 15 percent of yearly expenses. The last time city reserves were that high was in 2007 – before the recession.
The city could also create a separate reserve account to prepare for next year’s budget shortfall, with the first deposit projected at $6 million. The council will consider approving the budget changes during Tuesday’s 5 p.m. meeting.
The changes won’t spare the city from addressing a projected $26 million gap between revenues and expenses for the 2015-16 budget. The shortfall grows to $45.2 million if the city does not put off maintenance of city-owned vehicles and properties.
The city has $40 million backlog of “substandard building conditions” and anticipates spending only $1.2 million per year on safety-related issues. Fully funding vehicle replacement would cost $3 million to $4 million, but the city is spending just $500,000 per year.
Tacoma has a two-year budget that runs through the end of 2014, but state law requires cities to issue budget modifications halfway through biennial budgets.
The city had expected to only add $3.4 million to its reserves by the end of 2014. But several events this year have changed the city’s budget outlook, Budget Officer Tadd Wille said.
The city has collected more money from business taxes, parking revenues and property taxes than it originally expected. Tacoma has saved money by sending jail inmates to Fife instead of the Pierce County Jail. The jail savings for next year alone should be $1.3 million. The city’s health care plans will also be about $1.4 million less expensive in 2014 than projected at the beginning of 2013.
The proposed budget modification includes a change the council approved earlier this year that dedicates some revenue from the city’s tax on utility company earnings, $6.2 million next year, for city street maintenance.
The council is also considering paying $1.3 million for changes to the city parking system, including wayfinding signs, new residential parking permits and a $300,000 license plate recognition system.
In the coming year, the city could change how residential parking near high-volume businesses, schools and hospitals is handled. Parking limits could be enforced with a license plate recognition system. Such technology would allow a single city worker to drive through the streets and rapidly scan license plates using a camera mounted on a city vehicle.
The system looks for cars that have parked in an area too long, or for registered owners who are not paying their parking fines, said Public Works Director Kurtis Kingsolver. The technology is similar to that used to recognize license plates for bridge tolls.
It would allow the city to patrol areas that have parking time limits but no meters. The system and personnel to operate it could cost around $300,000, and it could bring in $500,000 in fines in the last half of 2014.
Overall, Wille said the budget modifications are good news for a city that’s struggled recently.
“We are more nimble and able to set aside funding and adjust to things as they come up instead of crossing your fingers and hoping at the end of two years you are on budget,” Wille said of the mid-year budget modification.
Tacoma is asking departments to watch budgets on a monthly basis in hopes the extra attention will help the city avert financial surprises. The practice began in 2013, Wille said.
City manager T.C. Broadnax said the change helped department heads keep track of their dollars and work closer with the finance department. As a result, the city has been able to adjust departmental budgets sooner.
“It’s helped them because there’s a lot of things, in my mind, now that they can speak more confidently about where their resources come from and how they are spending them,” Broadnax said Thursday.
During a recent meeting, Broadnax reminded the council that even though the city’s budget projections appear favorable for now, the council needs to save the money for future expenses.
For instance, the city has a $5 million federal grant to pay for police officers, which ends in May 2015. A $7.7 million grant that pays for firefighters ends in September 2014. Those grants helped save jobs in the last city budget.
“I’ve got to figure out how to fund those 15 (police) officers and 37 firefighters” after the grants end, Broadnax said, but he wants to “avoid the situation where I’m adding resources during the biennium only to take them away again in 2015-16.”
“We are still facing a serious structural deficit,” Mayor Marilyn Strickland said at the meeting. “That’s not going to go away in one biennium.”
The city asked a group of volunteers to pore over the city’s budget. Last month, the Fiscal Sustainability Task Force submitted its recommendations. The highest-rated ones suggested the council consider cutting city employee benefits, wages and pensions.