This editorial will appear in Thursday’s print edition.
The latest sign that the economy is bad, really, really bad: The City of Tacoma is, in the words of a city councilman, having to cinch its belt one notch tighter.
City Hall had been an oasis of relative prosperity. While the state’s businesses laid off workers by the thousands and the Legislature grappled with a $9 billion shortfall, Tacoma city government seemed largely immune to the ravages of the recession, thanks partly to healthy reserve.
Just a few months ago, the City Council felt flush enough to spend $4.6 million on overhauling the city’s salary schedule, a move that bumped nonunion employees pay up by as much as 15 percent. The council almost handed City Manager Eric Anderson a similar raise last month before he wisely declined.
Now it appears that Tacoma won’t ride out the downturn as easily as it expected.
City officials released new financial data this week showing that while property and business tax receipts are higher than expected, they do not completely offset declines in sales and utility taxes. What’s more, city expenses are over budget by about $700,000.
All told, the city is missing financial projections by almost $5 million. The question: Is this just a blip or the beginning of a bigger problem? The best-case scenario has the gap becoming a $15 million hole by late 2010. The worst-case scenario pegs the shortfall at $30 million.
City officials are hoping for the best – actually a little better than the best. Anderson proposed, and the council accepted, what amounts to a wait-and-see approach.
Tacoma is making $11 million in cuts now by delaying equipment purchases, freezing a few open positions and forgoing travel and subscriptions – relatively painless steps compared with the measures other government agencies are having to take to balance their budgets.
Those cuts get the city most, but not all, of the way toward covering what the shortfall could be under its most optimistic projections. Anderson says he doesn’t want to go any further yet for fear of unnecessarily scaring people.
But the longer the city waits, the deeper it would have to go to find enough savings. Tacoma certainly wasn’t alone in misjudging the depths of this economic crisis. But once burned calls for twice shy.
Gov. Chris Gregoire is telling lawmakers to brace themselves for more bad news this summer and fall. Tacoma would be smart to do the same. In times like these, an overabundance of caution is not out of line.