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Tacoma budget discussion grows testy between city manager, council

Post by Lewis Kamb / The News Tribune on Aug. 18, 2010 at 12:02 pm with 8 Comments »
August 18, 2010 3:28 pm

A snit over budget plans emerged during Tuesday’s Tacoma City Council study session, after several council members raised questions and concerns to City Manager Eric Anderson about his strategy to help balance the 2011-12 budget.

Anderson seeks a strategy to refinance current debts and take on new debt for some new purchases as a way to avoid making tens of millions in hard general fund cuts.

Some council members asked Anderson to bring forward an alternative plan, showing what cuts he would make in lieu of the refinancing strategy. That led Anderson to warn the council that the option he presented is under a time crunch. By dragging out its approval, he said, the council could be hurting the city’s ability to maximize savings.

“I don’t think what the council has grasped — we don’t have a lot of time to consider sequentially a lot of alternatives,” Anderson said.

Anderson added the alternative to his re-fi plan is making an additional $22 million in cuts (or 220 layoffs) to the city’s general fund on top of an undisclosed amount of cuts – likely in the tens of millions of dollars – already planned due to projected revenue declines.

“If we have to make $22 million in addition to what we’re looking at, we would be into (cuts to the) police and fire (departments),” he said.

But Mayor Marilyn Strickland asked for a more detailed plan of potential cuts, noting that “we have options; it’s a big budget.”

“I don’t think it’s unrealistic to ask for information,” Strickland added later during the meeting.

The issues were raised during a presentation to the council by Anderson’s budget chief Bob Biles and his finance team. Biles and his group detailed a refinancing plan that would redistribute debt payments for the city’s current general long term obligation bonds, convention center bonds and other bonds.

By pushing obligated payments back to future years, and refinancing the debt now at lower interest rates, the city could help create an immediate $32 million in savings, Biles said. The refinancing would create a net present savings of about $140,000 over the two-year budget cycle, he added.

Anderson also seeks to sell short-term bonds up to $30 million for some capital items and projects that the city typically pays for out-of-pocket. The bonds would be termed over only the life of the needed capital purchases, such as police vehicles, he said. When the economy picks up, Anderson said, the city would return to its “pay as you go” routine for such items, likely in the 2013-14 budget cycle.

The savings under Anderson’s refinancing plan were not what Councilman Jake Fey said he had hoped to see.

Fey, who noted he is supportive of refinancing options, noted that under Anderson’s plan, which would reduce the property tax levy by $85,000 per year for two years, the savings passed along to taxpayers would only amount to “something like fifty cents per citizen.”

“A net present value of $140,000 doesn’t ring like it’s a big winner in terms of savings,” Fey said.

Other council members, including Ryan Mello, feared that assumptions built into the strategy that the economy will turn around in two years could leave the city in a bad place in the future.

“I’m concerned about pushing the problem off,” Mello said. “…I’d like to see more flushing out of alternatives before jumping to this solution.”

At times, the exchanges between Anderson and some council members grew testy.

“We’re not outright rejecting this,” Strickland told Anderson at one point.

“We’re a little squeamish about pushing debt off in the future,” she summarized. “We’re feeling a little pushed in the corner because we’ve been given such a tight deadline.”

“Welcome to my corner,” responded Anderson, drawing laughter from the meeting room.

But he added about the council’s desires to see more options: “I can’t make 22 million of reductions at the last minute. I’ve got to start working on that.”

Councilman Marty Campbell noted if the city did move forward with Anderson’s refinancing strategy, some of the savings realized could be set aside to off-set potential future cuts in case the economy does not turn-around quickly enough.

“If our biggest concern as a council…is kicking (debt) too far down the road, we can put some of those savings into a fund to soften the blow later down the road,” Campbell said.

In a recently completed annual performance evaluation, the city council generally praised Anderson for his work as city manager. But some council members also criticized Anderson for not providing enough detailed information or alternatives on budget issues and other important policy decisions, saying the limited information effectively backed the council into a corner on some decision-making.

On Tuesday, when Mello said he wanted to have more options and context for the council to make its budget decision, Anderson responded “I take issue with that.” He added he already provided the council with such context in a previous meeting, noting the council approved his moving forward on the re-financing strategy.

Still, the city manager agreed to move forward with two options on a parallel track, bringing to the council for consideration different budget proposals – one under the refinancing strategy, one with the cuts.

“I am not uncomfortable at this point beginning the process making the additional cuts, while at the same time the council looks at the bond issue,” Anderson added, asking the council “to come to a conclusion very rapidly about whether the refinancing is workable or not.”

“If we actually start through and get where those 220 people (being laid-off) are going to come from, we’re affecting lives we might actually not have to,” he said.

Fey responded the council will be ready to make a decision quickly, adding the council needed more time to review the same information Anderson already has had time to mull over.

“I’m not seeing the Draconian situation you’re viewing here,” Fey said.

Leave a comment Comments → 8
  1. Incredible. Aren’t these the same fiscal jokers who gave out big pay raises just last year? This is from 7/7/09 Tribune article:

    “As thousands of workers across the state, in both the public and private sectors, are grappling with layoffs and pay freezes, hundreds of nonunion employees at the City of Tacoma are getting raises as part of a wide-scale compensation adjustment aimed at streamlining the system and bringing pay in line with going market rates.

    Some saw increases of more than 15 percent, a News Tribune review of pay records found.”

  2. lewiswells says:

    This scenario works….only if the economy turns around and returns to levels of 5 years ago.

    I think that’s wishful thinking at best.

    Cutting spending was delayed until the reserve fund was depleted. No cuts in employment… rather the city will borrow the money. Taking on debt at this time isn’t the route I would take.

    I guess that’s why Anderson is making the big bucks….we’ll see won’t we.

  3. reformedliberal says:

    Anderson has run the City into the ground, and now he wants to cover it up by borrowing money.

    Time to fire the guy. We can do better.

  4. EatonvilleTaxPayer says:

    Pushing off the debt isn’t a good idea, but what he was referring to as saving money due to lower interest rates would be worth looking into.

    Cities all over are struggling with the same issues. I say, “Tighten the belts. Close a few parks. Layoff or offer paycuts to employees.

    People have to learn to live within their means…this includes city, county, state and federal government.

  5. PumainTacoma says:

    80% of the budget is salary and compensation. FIrst cut that down, lay off etc. If you are not an essential service, revise, consolidate tasks and duties. Same as the private sector. Many are doing the jobs of 5 people. No one is hiring so those that are left in the private sector wear many hats. Sorry but these govt. employees need to buck up and get LEAN if they plan on still having a job. No need to pay $30 hr to cut grass. Sorry comes to halt. No more $1000 love seats and high back mesh chairs at city hall. Cut the overhead, cut the maintenance. Pick up your office trash once every over week. One garbage can for food on your floor that employees dispose of and janitorial staff pick up. Stop the daily service of office workers. Cut the most you can at the administrative office level vs. service area.

    AND god forbid the cops have to drive to work themselves vs. use the city owned cars!

  6. justin_yorbum says:

    “As thousands of workers across the state, in both the public and private sectors, are grappling with layoffs and pay freezes, hundreds of nonunion employees at the City of Tacoma are getting raises as part of a wide-scale compensation adjustment aimed at streamlining the system and bringing pay in line with going market rates.

    Some saw increases of more than 15 percent, a News Tribune review of pay records found.”

    Hundreds of nonunion employees got raises? Obviously these nonunion people are getting out of control! Nonunion employees had their place, once upon a time, but that time has obviously past. Something needs to be done- these nonunion bums are ruining America!

  7. Sounds like the council is growing testes!

  8. As always do the math. Saving $22 million saves 220 jobs. Didn’t know I was paying an average of $100K per city worker. No wonder we’re going broke.

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