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Cities facing tighter budgets

Spokane could fall $4.5 million short

Spokane leaders will start in a deep hole as they begin deciding how many police officers, firefighters and other employees will be on the payroll next year.

Chief Financial Officer Gavin Cooley told City Council members last week that the city could be short as much as $4.5 million if they want to maintain current services while also meeting the administration’s goal of adding 12 police officers, six firefighters and a police ombudsman in 2009.

Even with the dire number, City Administrator Ted Danek said he expects no layoffs because the city is able to dip into a reserve fund recently created for use during economic downturns.

Like cities across the county, most communities face tight budgets in the coming year. Problems stem from declining revenues from sales taxes, real estate taxes, and fees for permits and new construction.

City leaders in Washington are beginning to debate 2009 budgets, which must be approved by the end of the year. Idaho budgets must be set by the end of September.

Among the signs of budget crunches:

Spokane County laid off 12 building and planning employees in May and June.

The Spokane County treasurer’s office reported collecting $1.8 million in real estate taxes through July, down from $3 million during the same period in 2007.

The city of Coeur d’Alene expects to earn $1.3 million in the 12 months ending Sept. 30 from building and permit fees, down from $2 million three years ago. Spokane Valley approved a telephone utility tax this month to help pay for street maintenance.

Spokane Valley and Coeur d’Alene officials say they, like Spokane, are poised to avoid service cuts and layoffs through 2009.

In Spokane, the deficit is making some leaders question moving ahead with the second part of a policing plan instituted last year under former Mayor Dennis Hession. He proposed adding 24 officers over two years. City Council agreed to hire a dozen for 2008 and another dozen remain in the preliminary 2009 budget.

Councilwoman Nancy McLaughlin said she strongly supports the neighborhood policing plan and extra hires, but not if the city needs reserves to balance the budget.

“My conservative fiscal side says that it probably would not be wise to do that,” McLaughlin said.

Danek said Mayor Mary Verner is formulating a plan to balance the budget.

“Neighborhood policing has been promised, and we’re working our hardest to keep that promise,” Danek said. “That’s going to be one of the very last services, if we have to do service cuts, that would go.”

Spokane’s shortfall is only partly related to the economy. A smaller deficit for 2009 was being forecast by Cooley even before the slump mostly as a result of city wages and benefits rising faster than average revenue increases.

Sales tax revenue declines are the worst the city has seen in more than a decade. Spokane’s sales tax collections were down 3 percent from January through July compared to the same period last year.

In Spokane Valley, sales tax revenue was down 2.3 percent in the first six months of the year, compared to the same period in 2007. Last month, Finance Director Ken Thompson said he expected a boost in revenue from property taxes to help compensate for weakened sales taxes in 2009. Sales taxes haven’t been a problem so far in Coeur d’Alene, said Troy Tymesen, the city’s finance director. Only recently did the state notify the city of possible declines.

Idaho collects sales taxes statewide and divides a city’s take largely based on population. In Washington, a city’s earnings are based on what is collected within city limits.

Coeur d’Alene’s 2008-09 budget won’t have much room for new services as the city deals with declining revenue from permits and building fees, but cuts are unlikely, Tymesen said.

“We designed these things to be sustainable even in rockier times,” he said.

The economic downturn is a far cry from 2004, when tepid growth forced the city of Spokane to lay off dozens of workers.

Since then, the city followed Spokane County’s lead in creating a reserve fund equal to 10 percent of its main budget. On top of that, Spokane City Council finished building a separate $5 million rainy-day fund earlier this year to help avoid layoffs in economic downturns.

How much of that reserve should be used so quickly after its creation likely will be a significant portion of the debate as city leaders set the 2009 budget.

“I’m not happy having to deal with a deficit but, like I said, we’re in a good position to deal with it,” said City Council President Joe Shogan.

Jonathan Brunt can be reached at or (509) 459-5442.