Spokane city officials announced a hiring freeze Friday to hold off a budget crisis this fall.
A slowdown in the economy, problems in the county assessor’s office and higher expenses are contributing to the problem.
Current revenue projections show the city should end the year with about $4 million less than was budgeted, but still have enough cash to close the books, said Budget Director Ken Stone.
Without that extra money, the city will have trouble balancing its budget in 1996, so that’s why the hiring freeze was ordered now, he said.
“We are looking for ways to save money,” Stone said.
Spending in the general fund for services such as police, streets, parks and fire protection totals $99 million this year.
Tax revenue is down about 1.2 percent from projections. While that may not sound like a lot, it comes after sustained growth dating back to the late 1980s, and the expectation that growth would continue at a modest pace.
The county assessor recently revised the values of five major properties in the city, leaving Spokane with about $400,000 less in property taxes than expected.
The state revenue department is offering to help the assessor improve the management of that office.
The hiring freeze probably will be accompanied by other cuts, which are being studied by the city manager’s office and a City Council committee, Stone said. “The last thing we want to do is create a mood of panic.”
Councilman Chris Anderson said he’s unhappy it took Stone and City Manager Roger Crum so long to respond to the city’s financial problems.
“This didn’t happen overnight,” he said.
Sales tax collections were down about 5 percent in January, February and March combined so there was plenty of warning, Anderson said.
“It’s unfortunate we have to wait for a crisis to do the things we should have done all along,” he said.
Stone and Finance Director Pete Fortin said mid-year budget problems are not unusual for Spokane, and they’ve been able to work through them before.
Anderson said the city may have made a mistake by approving three-year salary packages for employee unions. Those will lock the City Council into escalating costs regardless of tax projections for 1996.
The hiring freeze is being applied to all city departments, including police and fire, Stone said.
The fire department is currently at full strength and the police department is waiting to hire two replacement officers. Those will not be hired. However, police added 25 officers last year, Stone said.
Stone said the city will have about $1 million left over for 1996.
The 1995 budget, adopted last fall, called for an ending balance of $5 million. That money was to be rolled into the 1996 budget.
A sure sign of the weakening economy is a drop in building permits. A year ago, the city collected about $2 million in building permit fees, but Stone now projects permit fees will total $1.7 million this year.
Another part of the revenue problem may be the loss of retail sales to a series of large new stores in unincorporated areas such as Shopko on the South Hill, Eagle Hardware in the Spokane Valley and Costco on North Division, Stone said.
As of May, sales tax revenue was down 2.3 percent over the same period last year, or about $240,000.
Also, a reorganization in the funding of the County Health District was delayed, and that is costing the city about $400,000 more than planned.
xxxx WHO IS AFFECTED The hiring freeze is being applied to all city departments, including police and fire.