Tacoma plans no cuts to service, jobs

NIKI SULLIVAN; niki.sullivan@thenewstribune.com
Last updated: November 12th, 2008 08:58 AM (PST)

The patch would prevent cuts in the $441 million two-year budget and allow the city to continue operating at the same level, according to City Manager Eric Anderson. But it wouldn’t be a long-term fix.

“We’re using the rainy-day fund to get through the recession so that we don’t have to reduce or eliminate any services and can maintain the momentum we’ve established in service improvement and economic development,” Anderson said in an interview Friday.

He said the city would be left with 5 percent in reserves, which is the minimum allowed by city policy.

That means the patch would suffice for this biennium, but if the economy doesn’t improve and tax collections continue to lag below what’s forecast, the city will have to cut services in 2011, he said.

The city would take the nearly $14 million patch from its “beginning cash” fund carried over from this budget cycle, counter to the City Council’s goal of paying as it goes, according to a letter written by Anderson in the budget.

“We had hoped to eliminate the use of beginning cash by this time,” the letter says, but “the recession has temporarily delayed us from meeting that objective.”

The money would prevent the city from having to cut services and lay off workers, Anderson said. In fact, it would allow for 17 city workers to be added to the payroll, bringing the total number of city employees to 1,471.

In addition to maintaining the same level of service, the city would be able to continue with construction as planned.

One of the initial suggestions for budget savings was to delay some construction projects, which would save money in the short term. But, because construction costs are rising, that move would make the projects more expensive in the long run, so the city decided against it.

In the new budget, the city manager’s office estimates sales tax revenue will drop by about $10 million, to $86.8 million, and that business taxes will decrease by $2 million, to $82.5 million.

In all, the city projects total taxes will be up just $3.9 million, to $361.6 million. The previous biennium, the city budgeted for a $30 million increase in tax collection.

The projections are made by the city’s assistant director of finance and budget, Amy Palmer. She bases the projections for future tax revenue collection on national and regional financial publications, Anderson said.

While Tacoma would maintain service levels, many cities aren’t faring as well. The City of Seattle, for example, is making significant cuts in its 2009-10 budget.

The difference can be traced to several key factors, Anderson said: City leaders decided to create a reserve fund during flush years, and the city limited many employees to a 1 percent raise in recent years, which kept labor costs down.

Anderson also said the city’s projections have been more realistic, thanks to Palmer.

He said that when they were writing the 2007-08 budget, he often disagreed with Palmer’s conservative estimates. When the economy took a turn for the worse, he realized she was right.

“I didn’t argue with her this time,” he said.

Niki Sullivan: 253-597-8603

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Originally published: November 12th, 2008 12:24 AM (PST)