Spokane leaders last week climbed out of a $7 million budget hole and approved the city’s 2010 budget with no layoffs and no dramatic loss of city services.
The approval allows officials to concentrate on a bigger financial challenge: a predicted deficit of more than $10 million in 2011.
In the two budgets approved since the economic downtown began, Mayor Mary Verner has avoided major job losses by taxing previously untaxed utility fees, increasing business license fees, negotiating union concessions and, next year, using about $2 million of the city’s rainy-day fund.
Verner’s strategy to fill the 2010 deficit won the unanimous backing of the City Council last spring. But last week, after months of completing the details on the approach, her plan was approved only narrowly.
“I’m relieved,” Verner said after watching the council vote 4-3 in favor of her budget. “A difficult hurdle is behind us. We have a lot more work ahead of us for 2011.”
Council members Bob Apple, Al French and Nancy McLaughlin opposed the budget.
Apple said Verner’s budget didn’t cut enough in some areas and cut too much from others. He noted that none of his ideas for reductions were considered. One of his proposals, to axe the Chase Youth Commission, gained no traction on the council.
“There’s just a lot in this budget, and there’s a lot of things that I think that needed to be reviewed and should have been reviewed, and they haven’t been,” Apple said.
Verner’s strategy was to push for across-the-board cuts so that all unions would have an incentive to accept concessions to avoid layoffs. Every union except the Spokane Police Guild met its target number to avoid layoffs, and even the guild agreed to cuts large enough to avoid pink slips.
While the city will avoid the kind of service reductions that Spokane County recently announced with reduced service hours, some areas will be stretched.
Although the Police Guild agreed to forgo a pay raise next year, police won an extra week of vacation and a 4 percent raise in 2011. Ten police jobs that were unfilled were eliminated, and Councilwoman Nancy McLaughlin argued that the extra vacation is equivalent to losing seven officers.
Concessions agreed to by the city’s bargaining groups are significant compared to what unions offered during the city’s last fiscal crisis in 2004 – when about 125 city employees were laid off. But Spokane’s work force has had it much worse in earlier economic slumps.
Even with concessions, most city employees with the exception of police will receive pay raises next year. In the Great Depression, the Spokane City Council under the leadership of Mayor Leonard Funk approved 10 percent cuts in city salaries in 1932 and 1933, according to reports in the Spokane Daily Chronicle.
In explaining his vote against the 2010 budget, French complained about the decision made last year to tax utility fees that pay for construction, including projects that will end the discharge of raw sewage into the Spokane River during rain.
Last year officials created the tax, which effectively transfers almost $5 million a year from sewer and other utility projects to funds that pay for police, fire and other services. French and others argue that the tax will be passed on to utility customers through higher sewer and water rates.
“I continue to think that was the wrong thing to do,” said French, who has announced his candidacy for Spokane County Commission. “It delayed this council and administration from having to deal with some of the tough issues.”
Last year, however, French voted in favor of Verner’s decision to tax the utility fees. He also voted for Verner’s 2009 budget, which included the taxes. At the time, he said he did so reluctantly and with hope that the decision would not be permanent.
At the same meeting when the City Council approved the 2010 budget, it increased sewer rates by 15 percent, and similar hikes are expected in the next few years.
City administrators argue that the utility tax on fees that pay for sewer upgrades is only a small part of the reason for rate increase. The major culprit, they say, is the estimated cost to upgrade the sewer system – about $750 million.
As for next year, Verner said she’s looking for more “dramatic” solutions, like consolidation of services with county or other local governments. She has formed a citizens committee to examine budget solutions.
Supporters of Verner’s 2010 budget said the relationships built in negotiations with unions this year could be helpful in solving the 2011 deficit.
“We’ve shown that we can address a major budget deficit,” said City Council President Joe Shogan, who joined council members Steve Corker, Richard Rush and Jon Snyder in supporting the budget. “We’ve accomplished a balanced budget and we haven’t had mass layoffs.”