City”s budget cuts aren”t over

Four months after the city of Spokane made sweeping cuts to its general fund services, top officials at City Hall are talking about the prospect of even more cuts for 2006.

Current estimates show a revenue shortfall of $1.5 million to $2 million in each of the next five years from what currently is a $117 million budget for police, fire, library, parks, streets and other non-utility services. The shortfall is equivalent to the cost of a dozen police or fire officers.

Employee costs are rising at a rate of 4 percent a year while city tax revenue is expected to increase only 2.5 percent each year through 2010, said Chief Financial Officer Gavin Cooley in a briefing to the City Council on Monday.

He described the problem as a “slow bleeding process.”

Higher medical costs, modest wage increases and sluggish tax growth from a struggling urban economy are at the root of the problem, Cooley said.

Union leaders on Tuesday said they are relieved the problem isn’t as bad as a year ago when the city slashed 154 positions from the general fund. “Some areas of the general fund have been pared back so much there are few options,” said Joe Cavanaugh, president of Local 270, which represents rank-and-file workers.

“I think it’s been cyclical over the years and I think this is a bad cycle,” he said.

Firefighters want the city to ask voters for a one-year public safety levy – as much as $8 million – to restore some of the cuts to police and fire services this year, but the union is still waiting for Mayor Jim West to put his support behind it. “He keeps giving us lip service,” said Lt. Greg Borg, president of firefighters’ Local 29.

City Council members had the same question Monday night. Cooley said a public safety levy is good for only one year, and is under consideration by the administration.

“Are you talking about laying off more police and fire?” asked Councilwoman Cherie Rodgers. “Where are you looking at making the cuts?”

Cooley said the administration is planning another round of priority-setting work in an effort to find new places to cut the budget.

“We are being very sensitive to any kind of tax increases,” he said.

A legislative proposal to give cities authority for multiyear levies died in committee during the recently adjourned session in Olympia, Rodgers said.

Budget problems from 2004 spilled over into 2005 when an expected cash carryover of $1.2 million failed to materialize. Instead, the city fell into a temporary cash shortfall and was forced to borrow money for several months from a solid waste reserve fund to pay salaries and other weekly bills.

Ongoing budget problems have continued to put pressure on city expenses.

Health care costs could rise another 12 to 15 percent in 2006, on top of the 95 percent increase in premiums over the past five years. The city’s police pension fund has been drawing more money than anticipated for medical costs of retired officers.

Council members have called for increases in the employees’ shares of dependent premiums, but those are the subject of labor negotiations and are not expected to change soon.

Three city unions, including the Police Guild, have labor contracts that expire at the end of this year.

Fuel costs are increasing about $60,000 to $70,000 this year.

Part of the 2005 budget was financed with one-time draws on reserves for police vehicles and local improvement district projects. Those funds will not be available in 2006.

The city in June is expected to sell bonds to finance its settlement of the River Park Square parking garage lawsuits at an annual cost of about $1.7 million.

On the plus side, the city is expected to save about $300,000 in outside attorney fees for taking the RPS case to trial. Sales tax collections are up by 4 percent, slightly ahead of forecasts. Department heads have been asked to hold vacant positions open as long as possible to save money.

In the future, the city is expecting a series of residential and commercial developments to boost tax collections.

Rodgers called for a more aggressive approach to annexations, particularly for the business strip on the west side of Division Street north of Francis Avenue. Cooley said the administration is seeking to cooperate with neighbors and county government officials rather than forcing annexations.