City Budget Worse Than Expected

The Great Recession may officially be over, but it’s not done fucking with city finances. Sitting before a chart illustrating slower-than-expected revenue growth, Seattle mayor Mike McGinn announced plans this month to cut another $25 million to ­$45 million from this year’s city budget. And it’s not going to be easy.

“The easy cuts have already been taken,” city budget director Beth Goldberg emphasized, referring to three consecutive years of budget reductions, to which McGinn quickly added, “We’ve taken cuts that weren’t easy, too.” The city already cut $67 million from the 2011 budget last fall, but now more cuts are required in the second half of the year to make up for lower-than-expected revenues.

Police, Fire, and Human Services Departments will be asked to propose 3 to 6 percent in budget reductions, while presumably less essential departments will be expected to shrink another 4 to 8 percent. The administration will also explore consolidating five smaller departments: Neighborhoods, Housing, Economic Development, Arts & Cultural Affairs, and Sustainability and Environment.

The problem: a relatively anemic 3.4 percent increase in revenue through 2014, compared to rates almost twice that after past recessions. So how does 3.4 percent annual tax revenue growth translate into 3 to 8 percent across-the-board cuts? Local taxes are only part of the revenue equation; the city anticipates losing millions in state and federal aid as they struggle to address their own budget crises. Meanwhile, costs such as health care and fuel continue to rise while city budget writers face serious questions about underfunded pension obligations and deferred maintenance. “Pay now, or pay more later,” McGinn succinctly put it.

The good news? City coffers could see as much as an $8 million one-time windfall from the state’s recently completed tax amnesty program. That said, nobody expects city services to return to prerecession levels anytime soon… if ever.