After a dozen workshops, dueling revenue forecasts, angst over proposed utility rate hikes and one dissenting council vote, Tacoma finally got a new budget.
By an 8 to 1 vote, the City Council approved a $399 million general fund budget proposal Tuesday that will eliminate 79 vacant city positions, leave unfilled another 54 open job slots and assumes unionized workers will agree to wage freezes for the next two years.
But approval of City Manager Eric Anderson’s spending plan for 2011-12 – a budget $43 million slimmer than the one adopted two years ago – didn’t come easy.
“This has been my fourth budget – and thank God it’s my last one,” said second-term Councilman Spiro Manthou. “This has been a huge challenge.”
After weeks of budget wrangling, Councilman Jake Fey ultimately voted against the proposal. He criticized the plan for not cutting deep enough and relying too heavily on favorable adjustments made in part to appease the council’s calls for more trims.
“This council member is concerned about whether we’re being real about our budget,” Fey said earlier Tuesday. “I think we need some deeper cuts … (or) we can find ourselves in a real fix.”
But while several members said they shared some of Fey’s concerns, they said the proposal had received enough scrutiny to comfortably support.
“As an elected official, I think we spent more time on this budget than any other budget I’ve worked on,” Mayor Marilyn Strickland said. “… I’m ready to support this. I think we’ve been very thorough.”
Throughout the process, Anderson defended his budget plan, ultimately winning majority council support for a version about $2 million less than what he had initially proposed.
Any more trims would put the city “on the brink of cutting services,” Anderson warned earlier Tuesday. He added his budget team offered reasonable and conservative budget projections.
“In point of fact, none of us know what what’s going to happen,” Anderson said. “I can not sit here and tell you that the numbers in this budget are real – none of us can.”
But, he added: “(We will) keep a very close eye on it and manage it through quarterly adjustments.”
The city’s general fund is just one part of an overall two-year budget approved Tuesday that consists of six different funds totaling more than $2.7 billion. As part of its actions, the council also incorporated a $1.1 billion two-year budget for Tacoma Public Utilities — a plan some $109 million less than the last adopted TPU budget.
The coming TPU budget includes cutting 84 positions, 20 by lay-off. It also assumes new revenues from power and water rate hikes for each of the next two years. The proposed increases on average range from 5 to 5.7 percent annually.
The council’s budget approval Tuesday does not automatically increase water and power rates. To do that, council members will need to separately adopt new rate-setting ordinances before any prospective hikes, including those to TPU rates or others proposed for some general government utilities, can take effect.
Before they’ll consider those measures early next year, council members approved an amendment Tuesday brought by Councilman Ryan Mello that seeks to offer relief to some struggling utility customers from the prospective rate hikes. It directs city and TPU staff to evaluate potential budget impacts that expanding a city utilities discount program to more low-income citizens would have, requesting alternatives be brought to the council no later than Feb. 1.
“There’s a lot of people that need help with their utility bill,” Councilwoman Lauren Walker said. “This just means we’re taking all of you seriously who are struggling and don’t want us to raise rates.”
A sticking point in the city’s general fund vetting this budget season involved smoothing out dueling projections for gross earnings tax revenues expected in the next two years. TPU officials projected those revenues, based on power usage and sales, to come in $6.6 million lower than what Anderson’s budget staff had estimated, creating a budget discrepancy and unease among some members.
At Fey’s urging, the council last month directed Anderson to provide options for cutting his budget by $3 million to $6 million to reduce the gap between the differing forecasts.
Anderson last week came back with three options, from which some council members created a hybrid approach to trim his original $401 million budget proposal by $3.6 million.
Among other things, the favored option included about $200,000 in cuts to staff training and travel; $500,000 in savings realized by freezing five more open city positions; and $1 million in reduced contribution projections to police and fire pension funds.
But Fey, who was not present during that workshop, noted most of Anderson’s presented cost-cutting options didn’t involve actual cuts. Rather, he largely met the council’s requested reduction goals by readjusting revenue and expense projections.
“We had a $6 million hole, (but) we only made cuts of $700,000,” Fey said. “…When I brought up the subject and suggested cuts, I thought I meant cuts – not different assumptions.”
Before voting against the budget, Fey proposed an amendment that called for Anderson by Feb. 28 to come up with more cuts of up to 10 percent in city’s professional services, position vacancies, contract services and travel expenses. When it was clear his fellow members wouldn’t support it, Fey withdrew the amendment.
Councilman Marty Campbell noted most of the city’s $43 million in budget trims occurred “around the edges,” with none of the city positions targeted for elimination including any police or fire jobs.
“Quite frankly, we’re in pretty good shape” compared to other governments that made deeper cuts, Campbell said.
Along with saving $13 million by cutting 79 positions and $10.8 million by keeping 54 vacant slots open, the adopted budget in part hinges on the assumption that unionized city workers will agree to no pay raises for the next two years. In all, that would save the city about $17.7 million over the budget cycle, projections show.
As of Tuesday, Anderson said the city had yet to reach agreements on wage freezes with any of its more than two-dozen employee bargaining units.
Alice Phillips, business manager for the International Brotherhood of Electrical Workers Local 483, said Tuesday her union has yet to even meet with the city on the issue.
“I don’t believe anybody is very far along yet,” added Phillips, who also serves as chair of Tacoma Joint
Labor, a coalition of city employee unions. “They’re not going to be done by the end of the year.”
With each passing day past Jan. 1 employee wage freezes aren’t resolved, city officials have said assumed budget savings will likely dwindle.
“The city can pass a budget with all of the assumptions they want, but that doesn’t mean that we’ll just kick the dirt, and say, `I guess we have to take it,’” Phillips said. “If we agree to something differently at the bargaining table, they’ll need to change their budget.”