City faces $6 million shortfall

Spokane city government is facing the prospect of closing a fire station, laying off police and reducing library hours in 2006 under a cash shortfall of nearly $6 million in the general tax fund.

Potential cuts would follow deep slashes in service from 2004 to 2005. Top officials said Thursday there is no sign of any turnaround in future years, and they may need to ask voters for a tax increase during this fall’s election.

The cash shortfall comes even as Mayor Jim West argued this week there was no financial crisis facing the city. He made that argument in seeking more time for an appeal of recall charges brought against him over allegations of sexual impropriety.

Higher medical costs, sluggish tax growth and continuing salary increases were cited Thursday as the main reasons for a worsening budget.

“It’s a bleak picture,” West said Thursday morning at City Hall.

City Council members on Thursday afternoon reacted similarly.

“I don’t want to go through the blood-letting we did last year,” Council President Dennis Hession said in reference to the 152 jobs that were cut in 2005. The cuts included more than 75 police and fire positions.

“If we have to do it, we have to do it,” he said. “We can’t manufacture money.”

Hession urged top city administrators to start looking for savings now. “I’m interested in shutting off the faucet,” he said.

West has said one option may be to ask voters to lift a lid on regular property tax collections that go to general fund services, including police, fire, libraries, parks and street maintenance.

A recent increase in assessed property values in Spokane has created an opportunity to raise the property tax to its constitutional limit of $3.60 per $1,000 of assessed valuation. Property tax increases are otherwise limited to 1 percent a year without a vote.

The mayor said he will form a citizens’ task force to consider options for a tax increase, and may ask his staff to prepare two budgets for voters to consider: one that includes a tax increase and one that does not.

A property tax increase would nearly close the budget shortfall, but it would not be enough to restore any police, fire or library services lost in 2005.

Fire Chief Bobby Williams said additional cuts could force the closure of a neighborhood fire station. Police have said they are having a difficult time controlling methamphetamine and property crime. West noted that Spokane has the highest property crime rate for Washington cities of its size.

The cash shortfall facing the city in 2006 has steadily mounted this year. One of the biggest problems is the increasing cost of providing health care. Not only are insurance rates rising by 15 to 25 percent, but the city is also liable for a handful of catastrophic health care cases involving retired police officers. Three retired officers have run up bills of $1.7 million this year, officials said. That’s nearly double what normally is paid through the police pension system.

City officials are also facing pressure for salary increases, including new rounds of negotiations with the city’s Police Guild and other unions. Some multiyear union contracts already call for salary increases.

The city expects to collect $121 million in general fund taxes next year, but is facing at least $127 million in expenses.

To complicate matters, city department heads have said they need an additional $4 million to maintain their current operating levels.

Chief Financial Officer Gavin Cooley said expenses are increasing at an average of 4.5 percent a year while taxes are growing at 2.5 percent.

City Council members have asked the administration to push for more annexations, including a tax-rich unincorporated area on the west side of Division Street north of Francis Avenue. The mayor has not been willing to force that annexation, in part because of concerns about maintaining good relations with Spokane County and the affected property owners.

The county, meanwhile, has challenged the city’s wholesale tax on wastewater collections and has withheld as much as $750,000 a year that would otherwise go into the city’s general fund.

Library Director Jan Sanders reportedly has started talking about consolidating library services into a countywide regional system to save money.

West has ordered the fire chief to study ways the city might charge for some of its medical calls.

Councilman Brad Stark said the budget problem is a strong argument in favor of selling Joe Albi Stadium, which costs the city between $300,000 and $400,000 a year to operate.