A note in a strongly worded memo delivered to city council by their central staff director, Kirstan Arestad, slamming a component of Mayor Ed Murrays budget.
  • A note in a strongly worded memo delivered to city council by their central staff director, Kirstan Arestad, slamming a component of Mayor Ed Murray's budget.
At a morning budget meeting in the Seattle City Council Chambers, council members and their central staff started the first major pushback to the mayor's budget I've seen so far this year. The drama begins!

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At issue: a mayoral plan to ask city departments to spend 1.5 percent less per year than their budgets actually allow, therefore balancing the budget without having to cut any services up front.

This idea is not sitting pretty with the council.

The underspend plan "raises grave concerns among central staff," said council central staff director Kirstan Arestad today. Under this plan, she noted, "it's possible that some of the council's [budget] priorities or adds could be adjusted—or eliminated—after the budget is adopted." Because instead of the executive and the legislative body agreeing up front on what to do with the city's money, Mayor Ed Murray is directing departments to cut back where they see fit throughout the year—removing a layer of legislative scrutiny and transparency when it comes to cutting and spending. (He's the departments' boss, after all, so he's wresting control away from council and into his own hands.)

Let's back it up, because while this issue has been under the radar in a big way, it's really not too wonky to grapple with:

Back when Mayor Ed Murray was drafting his budget for 2015-2016, he and his budget director mentioned that he would be writing this underspend plan into his budget. Why? Well, even though the city is recovering from the recession and growing, the city's increased costs of doing business are rising at a rate that keeps pace with that growth. And if your income and spending keep growing at the same rate, you don't end up having money left over.

And yet this growing city hungers for new programs—new city offices governing the enforcement of new labor laws and new education initiatives, the improvement of our utilities and transportation systems, reforming the police department, and so on. (Bill Lucia over at Crosscut wrote a thorough breakdown of this issue in August, back when it was first raised.)

So: In order to make up for what could be considered an approximately $16 million annual shortfall, given what the mayor's office wants to spend, they came up with this plan. Instead of going the usual route of cutting $16 million worth of spending a year, Murray and budget director Ben Noble decided to write the budget how they wanted, and then ask departments to like, hey, just leave a little bit left over at the end of the year, which should fill the gap. Noble emphasizes that given the nature of the economy, it may be that revenue grows more than projected and they don't even need to leave budgeted money on the table.

As Council Member Sally Clark pointed out today, underspending "isn't something that's foreign" to city hall, nor to other local governments. Noble agreed, noting that the city departments are currently under a similar underspend order right now, which was put in place earlier this year. But as Clark and others also stressed, you don't usually write it into your budget planning so brazenly, right up front. And the timing matters.

Large bureaucracies often don't spend every last dime they're allocated for all sorts of reasons, and the city likes to have that flexibility so they can put the brakes on spending if necessary later, or spend a little more if they have it. A planned underspend would eliminate that flexibility, and also potentially eliminate the basic transparency of what mayors usually have to do: Tell everyone up front, right when the budget's written, exactly what they'll be cutting.

Mike O'Brien told Noble this morning that it looks like, to truly balance the budget, "the mayor has to make $16 million in cuts, and those haven't been identified." Basically, O'Brien said, it doesn't seem fair to write a budget based on hoping your projections are too low. You have to write the budget for the money you expect to raise, and then you can alter it throughout the year if your projections were off. But those budget changes happen through council process, "and the public has an opportunity to weigh in on that." Under this system, he said, "we'd just hear at the end of the year" how it all turned out.

Sure, this budget is technically balanced, chimed in Sally Clark. "But it's balanced on the application of this new underspend tool." It "seems like the budget is trying to have it both ways," she said, as Noble kept mentioning that he thinks revenues will climb higher than projected and therefore solve this problem.

The Council is not thrilled with the idea that cuts to the budget—because "underspending" is just another way of cutting a budget—would happen later, and without council oversight. And Central staff director Arestad warned repeatedly that technically, this meant that things council wanted to spend money on and placed in the budget on purpose could end up as casualties of a department's underspending.

Arestad prepared a memo along with her presentation, and in it she offered the council three options for dealing with this plan:

1. Approve the mayor's plan as-is. (This did not appear to be popular with council.)

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2. Work with the mayor over the next couple weeks to figure out how to revise the budget up front so that all the spending/cutting is clear from the start.

3. "In recognition of the difficulty of accomplishing Option 2 within the next two weeks," Arestad's memo says, the council could "impose a blanket, proportional revision" to the budget's expenditures, and then work with the mayor in the future to update it when they have more time. Translation: Institute a blanket 1.5 percent cut across the departments—something also not popular with the council.

The council doesn't love any of these options, but the most common refrain was that there must be some other option "between options 2 and 3," as both O'Brien and Clark phrased it. Stay tuned.