“The economy is doing well, but the revenue growth has plateaued,” Seattle’s budget director said. Politics are also a factor.
Seattle Mayor Jenny Durkan is asking her departments to propose budget cuts of up to 5 percent for the future partly because the city has recently been spending more general-fund money than it has been taking in, her budget director said.
The mayor is also requesting the reductions — from what would otherwise be next year’s spending levels — because she may want to move some money to new and different programs after learning about her options, said Ben Noble, the budget director. And then there’s the political message Durkan was trying to send when she spoke about her plan last week.
“The immediate, near-term forecast for the general fund is one that poses some challenges,” Noble told the City Council’s finance committee after the mayor’s remarks.
The budget director said he’s waiting on hard numbers from 2017 and on a revenue forecast due in early April. But he estimates the city’s general-fund expenditures exceeded its revenues by $15 million to $20 million this past year.
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That was all right, because Seattle started 2017 with a general-fund balance of about $60 million, in addition to the city’s reserves, Noble said.
But that balance is disappearing quickly, he said. The budget director said he expects the city’s general-fund expenditures to again exceed its revenues in 2018.
“The economy is doing well, but the revenue growth has plateaued … We need to address that ongoing deficit,” Noble said, also citing “pressures for adding services in different areas” as cause for the city to consider cuts.
“We’re starting that dialogue now by asking departments to develop, first at a high level, their ideas about how they could address those issues.”
Noble said the mayor’s goal will be to save through “efficiencies” as much as possible, as opposed to actual service cuts.
Durkan isn’t the first mayor to seek reductions before submitting a budget to the council in September. Even Ed Murray, who oversaw a building boom and tax measures that sent Seattle’s revenues soaring, asked the city’s departments to propose modest cuts.
And the cuts Durkan is talking about wouldn’t necessarily reverse the growth of Seattle’s budget, because of built-in cost increases such as employee contracts and inflation. They would be reductions from the higher cost of running the city next year.
The mayor’s consideration of 2 percent to 5 percent cuts does represent a change, however, according to Noble, a holdover from the Murray administration whose reappointment was recommended Wednesday by the council’s finance committee.
Murray sought slightly smaller potential cuts of 2 to 4 percent and, thanks to late-year revenue updates, mostly ended up not needing to carry them out, the budget director said.
“We didn’t get to 5 percent previously,” Noble said, adding, “My expectation that we will need to adopt some of these reductions is also much higher now than in past years.”
Politics are another factor. The city passed more than a half-dozen new taxes and tax increases under Murray, while living in Seattle became less and less affordable.
During her campaign, Durkan promised to “scrub” the city’s budget for savings before seeking additional tax hikes.
Now seeking money for a college-scholarship program and discussing homeless needs with a regional task force, she may be trying to show voters she meant what she said.
The city’s Families and Education Levy, which Durkan could tap for the college program, is up for renewal later this year, while the homelessness task force is expected to make recommendations in April.
Councilmember Mike O’Brien isn’t tight with Durkan politically, having endorsed Cary Moon in the campaign this past year. But he said the mayor’s budget requests make sense because she may want to move money around.
“It’s frankly something I would consider doing if I were mayor. The budget she’s operating under right now isn’t her budget,” O’Brien said.
“Are Seattle’s revenues drying up? Do we need to cut services? I don’t think that’s the real threat here. It’s an opportunity to ask your departments, ‘What’s the 2 to 5 percent of work you’re doing that we could live without?’ A new mayor wants to know.”
How deep Durkan carves will depend on what savings the departments propose, and Seattle’s revenue calculus will change if the council adopts a new $75 million-per-year tax on businesses for housing and homeless services, as has been proposed.
In other words, nothing is certain.
“None of this happens until it comes to the council and we approve a budget,” O’Brien said.