Two long anticipated federal grants that were finally awarded last month to help spare more than 50 City of Tacoma police and fire jobs won’t cover most of a still lingering budget shortfall in 2012, City Manager T.C. Broadnax said Tuesday.
City budget officials have determined only about $2.5 million of the nearly $13 million in multi-year police and fire grants can be applied this year to help the city trim a remaining $11.8 million general fund gap.
That still leaves a roughly $9.3 million hole in 2012 – a shortfall Broadnax said he’ll address after reviewing various city revenue sources over the next few weeks.
“We’re still looking to close that gap,” Broadnax said. “Obviously, we’ll have a balanced budget by the end of the year.”
The grants (which we wrote about here and here) guaranteed the city’s public safety departments will see no layoffs during the awards’ term – two years in the case of the fire department and four years for police.
Broadnax added Tuesday he doesn’t expect any non-public safety layoffs will be necessary to deal with the lingering shortfall, but he noted he must assess all options.He expects to present a plan to the City Council within the next few three to four weeks, he said.
The city manager gave the latest accounting of the 2012 general fund gap Tuesday before interim City Finance Director Jeff Litchfield presented an encouraging quarterly budget update to council.
The good news, Litchfield told council members, is the city’s actual revenues and spending though the first half of 2012 came in better than projected. Tacoma’s major revenue sources collectively outpaced projections by about 2.2 percent, or $2.1 million. Meantime, city spending came in slightly below estimates – by about $366,000 in all.
“I do want to emphasize that the economy is very delicate,” said Litchfield, who noted “indicators” still paint a gloomy economic picture. “This is good news, but I think we want to put it in proper perspective.”
Litchfield added the city’s rainy day reserve fund also exceeded projections during the latest quarter by about $3.4 million. That “unreserved fund balance,” as it’s called, now stands at about $21 million — or about 11 percent of this year’s general fund budget. But the reserves are apt to fluctuate before year’s end, based on various funding commitments, Litchfield said.
Councilman Jake Fey described the latest update as “encouraging information.” “Not `out of the woods,’” Fey said, “but encouraging.”
Beyond 2012, the bigger challenge facing Tacoma is dealing with what Broadnax has called “structural budget issues” – expected expenses that outpace anticipated revenues into the future. Without major changes, the city is on track for up to a $65 million general fund shortfall over the next two years and larger deficits beyond that.
To help him prioritize spending for the next city budget, Broadnax has launched a collaborative process that seeks to incorporate input from the public, council and city staff. He plans to present a 2013-14 budget proposal in October.