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Sun., Nov. 15, 2009

Cities need Legislature’s help fixing budget flaws

When reviewing the city of Spokane’s budgeting principles, they seem obvious: match spending to current expenditures, keep prudent reserves, finance highest priorities first, don’t pay for ongoing expenses with one-time money, keep strict controls on hiring and spending, and use realistic six-year forecasts.

But in practice, these principles had been routinely violated with accounting tricks that hid underlying problems. A few years back, the city’s top two financial officers, Gavin Cooley and Tim Dunivant, placed the city on more stable ground with honest budgeting. What’s remarkable is that these reforms took hold as the city changed mayors four times in five years.

The payoff has been finances that city officials boast are less strained than in most other cities. Reserves are strong, and the bond rating has improved. By itself the 2010 budget, which required filling a $7 million gap, isn’t pretty. But compared with the challenges facing the state, county and other cities, it looks pretty good. By gaining some employee concessions, gently tapping reserves and raising the price of business licenses for the first time in 20 years, the city was able to balance the budget. Mayor Mary Verner and her team deserve credit.

But 2011 promises to be another challenging year, and this highlights the reality of the city’s long-term structural deficit, meaning revenues cannot keep up with costs. City leaders are limited in their ways to respond.

Eighty percent of costs are for labor, but officials are hamstrung by binding arbitration for public safety employees, where Spokane salaries are compared with those in like-size cities without due consideration for the city’s ability to pay. That leaves Spokane funding West Side-size salaries from a poorer tax base.

Taking on unions in Washington state can be perilous because of their political clout. But at some point, the state Legislature needs to realize that the current setup isn’t working for most cities and it is especially damaging to those on the East Side. Labor unions are already upset with Democrats for all of the cost-cutting in the last legislative session. They wanted taxes raised. So they’ve either curtailed or cut off donations to Democrats and warned them that this will continue if they aren’t more labor-friendly in the upcoming session.

“I think the labor movement is more serious about withholding support from Democratic candidates this year than I have seen in my 30 years in politics,” Dwight Pelz, chairman of the state Democratic Party, recently told the Seattle Times.

Rather than back down, Democrats ought to take on the unions in an effort to bridge the structural deficits facing nearly all Washington cities. Taxpayers cannot keep up, and cities can only do so much. State lawmakers need to step up and do the rest.

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