Faced with a projected $20 million hole in the 2024 budget and little time to fill it, Mayor Nadine Woodward’s administration has released a preliminary proposal to shore up the city’s finances with a hiring freeze, increased property taxes, cut positions in the fire department and pulling from a traffic infrastructure fund to pay for police.
Members of the City Council, who are responsible for approving the city’s annual budget, say they still want clearer details on the administration’s plans to bridge the gap. Two public meetings to discuss the budget are scheduled for Friday and Oct. 13.
“I think it needs work,” Council President Lori Kinnear said. “Some of it is in too general terms for me. And are we setting ourselves up for another cliff in 2025?”
The preliminary budget, prepared by Spokane’s Chief Financial Officer Tonya Wallace, calls for decreasing the city’s expenses by $7.7 million, in part by continuing a hiring freeze with some exceptions, restructuring debt from the city’s 2005 settlement related to the River Park Square debacle and cutting 19 positions from the fire department.
Those cut firefighter positions come from the “fire relief pool,” city spokesman Brian Coddington said. Those are positions working each shift beyond minimum staffing requirements, typically backfilling a spot left vacant by a firefighter on sick or holiday leave. A recent study suggested the positions could be cut without the city dropping below minimum standards of service, Coddington added.
The administration also suggested increasing the city’s annual revenues by $2.2 million by updating fees for various services, such as for providing police security at events or issuing permits for solar panel installation, as well as increasing property taxes by at least 1% next year, among other adjustments.
Woodward vetoed a similar property tax increase going into the 2023 budget, which raised nearly $650,000 at a cost of a few dollars to most property owners, arguing that she wanted to give families a break as they headed into a possible recession.
It was notable for the mayor to ask this year for the property tax increase, even as the administration continues to predict an economic slowdown during the start of next year, City Council Budget Director Matt Boston said.
“It’s a good sign they recognize how dire the situation is,” Boston said.
The preliminary budget, which Coddington emphasized was prepared by Wallace and was not a statement of the administration’s position, goes further.
Wallace wrote that, in the long term, even larger property tax hikes would be “critical to maintaining and enhancing critical services, addressing the maintenance backlog and ensuring that the City has the necessary public safety equipment and facilities …”
Washington law allows local governments to collect 1% more through their regular property taxes every year without requiring a vote of the people. A levy lid lift, which allows for a larger tax increase, requires voter approval.
The preliminary budget calls for another $9.9 million in “bridge funding,” which includes short-term or one-time decreases in costs or increases in revenue. This largely entails consolidating debt or shuffling money around the city’s various budget buckets.
While the city operates with an approximately $1.2 billion annual budget, the $20 million hole that leaders need to fill is in the $230 million general fund. It holds the city’s most flexible dollars, which pay for, among other things, the police and fire departments.
The administration’s preliminary budget suggests that the city could raise $2.4 million for the general fund by pulling money from the utility fund, another $2.1 million by drawing down savings and another $2 million each year for the next two years by raiding the traffic calming fund.
That last proposal has proven particularly controversial with city council members.
The traffic calming fund includes revenue collected from speed and red-light cameras, and can be used for programs to mitigate the safety risks associated with motor vehicles, often involving improvements to physical infrastructure such as stop signs or speed bumps.
In the past, as local lawmakers have faced criticism that the expensive tickets issued by cameras were intended to raise money, not improve public safety, council members have been able to point to the traffic calming fund and argue that ticket revenue could not be pilfered to backfill the general fund.
But Woodward has called the traffic calming budget a “slush fund” of the City Council, which she argued in a recent interview has too much power over how the money gets spent. She has called for $2 million next year from the fund to help pay for the police department’s ballooning budget, including for nontraffic enforcement positions.
While some council members have indicated they may be willing to allocate the funds to pay for traffic enforcement officers, there’s little appetite to use traffic calming fund to pay for overtime spending or to otherwise broadly supplement the police budget, Boston said.
Boston remains concerned about the city’s long-term financial health without significant course correction. Some of the savings identified in the administration’s preliminary budget put off costs, such as loan repayments, until after next year, increasing total costs in order to make the 2024 budget pencil out. Some of the approximately $20 million gap would be filled by using savings, which Boston has argued has been a chronic problem under the Woodward administration.
For her part, Woodward has argued that spending down the city’s savings was a necessary response to unprecedented challenges, such as the pandemic, inflation, a tight labor market and other considerations.
Boston believes the administration has done whatever it could to commit to painful cuts, but without a levy lid lift or an infusion of funding through Measure 1 on this year’s November ballot, he doubts the city can avoid them for long.
“If neither comes to fruition, you then have much more drastic cuts coming in 2025,” Boston said. “Right now, we have not right-sized the budget – we are still raiding one-time money.”