City Manager Andrew Neiditz said Lakewood now faces a shortfall of $250,000 to $750,000, something officials hadn’t expected just two months ago.

But the “roller coaster” ride of the national economic slowdown and the credit crisis, which has slammed communities large and small, recently caught up to Lakewood, Neiditz told the City Council on Monday night.

City staff now project a drop of $250,000 in sales tax revenue for 2009, and that’s the best-case scenario.

The city also is no longer counting on up to $500,000 in sales tax revenue the state originally projected Lakewood would net from Washington’s streamlined sales tax system.

The new system, designed to capture sales made over the Internet, steers tax revenue to cities where goods are delivered, rather than where the company selling the goods is located.

The state projected the new law would provide a $500,000 boost to Lakewood.

But that hasn’t begun to show in the three months since the law took effect, assistant city manager Choi Halladay said.

He said he’s spoken with other communities that haven’t seen much of an increase yet, either.

“It’s really going to take longer for us to figure out what effect the streamlined sales tax has,” Choi said Tuesday.

Lakewood leaders will have to rework their proposed 2009 budget, even as a chunk of it is now in the hands of voters.

On Nov. 4, voters will decide whether to ban the city’s four minicasinos, which staff members say generate about $2.85 million in annual gambling tax revenue.

City staff has drawn up two proposed budgets – one that includes the revenue and another that doesn’t.

Halladay said the city might be able to make up part of the shortfall with cost-cutting measures it made this year, such as waiting to hire people for some vacant positions.

But Neiditz said the council will have to take a look at other savings.

“Needless to say, this economy has produced surprises for a lot of people,” he said.

The City Council must adopt a budget by the end of the year, but it traditionally has done so in late November or early December.

HELP WITH PAY FOR DEPLOYED?

Lakewood doesn’t have any employees who are deployed or are preparing to be deployed to active military duty. But it’s had as many as three at one time over the past decade.

On Monday, city leaders discussed a benefit that would make Lakewood one of the few local governments that cover diminished salaries for city employees who are deployed.

Mayor Doug Richardson said it’s logical for the city to cover the gap in salary, considering how Lakewood is intertwined with its military neighbors – Fort Lewis, Camp Murray and McChord Air Force Base.

“I think that quite frankly this is something we should have done a long time ago,” he said.

The city already extends medical and dental benefits to deployed employees’ dependents for up to two years while they’re serving overseas.

Under the proposal, Lakewood would join four other local governments that cover or have covered an employee’s lost salary if service overseas means a decrease in pay, including the City of Tacoma and Pierce County.

City staff will bring back more information to the City Council next week.

Richardson, a brigadier general in the Army Reserve who officially retires this week, said the large number of military veterans living in Lakewood would likely support the salary benefit.

“I find it very hard to believe they’d be up in arms that we’re keeping families whole while they fight overseas,” the mayor said.

Brent Champaco, The News Tribune