L-R: Mayor Mike McGinn, Budget Director Beth Goldberg, and Finance Director Glen Lee
During a gloom-and-doom press briefing this afternoon, Mayor Mike McGinn, city budget director Beth Goldberg, and newly appointed acting city finance director Glen Lee announced that the city, facing what McGinn called "the longest, deepest recession since the Great Depression," will make a number of major changes to its annual budget process.
McGinn has proposed creating a new Central Budget office, headed by Goldberg, which would oversee the budget, and a new Office of Financial and Administrative Services, overseen by current Department of Executive Administration Director Fred Podesta and Lee, which would ovesee the city's financial procedures, tax administration, and business regulation.
The cumulative effect, as with many of McGinn's proposals so far, would be to centralize budget authority over all departments in the mayor's office. "What I've learned... is that separate departments don't all report revenues and expenditures consistently across" the city, McGinn said. "We're going to have to get greater control over those things."
Additionally, McGinn blamed the city's budget problems on "insufficient long-term planning" by the budget office in the past—an apparent swipe at former budget director Dwight Dively, who left the city after 16 years in the position to head up King County's budget earlier this year. Asked if he was criticizing Goldberg's predecessor, McGinn said, "prior budgeting was informed by a sense that, yes, there may be an economic downturn, but that will be informed by later improvement. We didn’t plan for a recession as long and deep as the one we face now."
Goldberg also criticized the city's decision, on the advice of Dively's finance department, to dip into the city's rainy-day fund to close a $40 million gap last year. "Had the [shortfall] been closed using ongoing reductions that lowered the base [budget], the deficit for 2011 would only be $21 million" instead of $50 million, Goldberg said.
McGinn and Goldberg also noted that "looming budget issues"—including an unexpected increase in the jail population; costs associated with a late-2009 power outage at Seattle Center; increasing retirement costs as more city employees retire; and maintenance backlogs at several city departments—will put even more stress on the city budget. As, he said, will the fact that Seattle Public Utilities' revenues are down because people are buying less stuff, and thus throwing less stuff away—reducing the amount of money spent on solid-waste disposal. Similarly, the Seattle Department of Transportation lost money because it failed to anticipate reduced gas-tax revenues, to the tune of between $4 and $6 million.
McGinn said the shortfall would also mean likely increases to City Light rates as well as one-time surcharges, reorganizations of city departments, and job cuts. He backed even further away, however, from his previously stated goal of cutting 200 strategic advisor and management jobs this year, saying only that "If, after four years we haven’t reached that goal … then you’ll be able to challenge me on whether I’ve met my commitment to a reduction of 200 senior-level positions." He added: "I think those will take time to accomplish."
Interestingly, two of the "looming issues" McGinn raised that are contributing to the budget shortfall are actually in line with the city's (and McGinn's) environmental and sustainability goals: The falloff in solid-waste disposal (the city has adopted a goal of "zero waste") and the reduction in gas taxes (a result, in part, of the fact that people are driving less). Asked about how he would deal with that discrepancy over the long term, McGinn said, "We know that gas taxes are going to decline over time. The issue is that we spent gas tax [revenue] faster than anticipated." As for solid waste, he said, "We may indeed be seeing the positive effect of our strategy to reduce waste. You have to look at a much longer term than the budget cycle."