City Hall

City Budget Forecast: 2012 Budget Another $4.3 Million Short, But Real Shortfall Hits in 2013

By Erica C. Barnett November 1, 2011

City budget director Beth Goldberg outlined a revised 2012 revenue forecast this morning that shows an additional $4.3 million revenue shortfall next year, on top of a projected $18 million shortfall the city has already accounted for. Much of that shortfall can be made up in the short term by spending down the $3.4 million reserve Mayor Mike McGinn proposed as part of his budget earlier this year---$2.3 million in 2012 and $1.1 million in 2013.

Next year's projection pales, however, in comparison to projected shortfalls in 2013 and 2014, when deficits are projected at $39.4 million and just over $44 million, respectively.

The reason for the ballooning shortfalls is that the city's revenues are expected to grow much more slowly than costs (city budget analysts project growth of less than one percent in 2013 and 2014), and because the base on which each budget after 2012 will be built will be smaller than previous budgets. The more you cut now, in other words, the more you have to cut in the future. "The numbers get more staggering" the further out you look, Goldberg said.

"After four years of reductions, we don't have the revenues we once did," Goldberg said. "We just don't have the flexibility that we once had to weather these kinds of fluctuations."

In the short term, state and federal budget decisions could make the city's budget outlook even more dire. "We continue to face challenging times, and what's going on at the state and fed level could continue to make our situation worse,"  Goldberg said.

Gov. Chris Gregoire's proposed budget would eliminate about $7.2 million the city receives in profits from liquor sales, and could eliminate another $2.5 million from state criminal justice assistance funds---part of the $91 million in "revenue sharing" funds the governor has proposed cutting statewide. In addition to that $9.7 million hit, the state could cut health and human services and public safety programs to which the city now provides "enhancement" money; if those programs go away, the city will have to decide whether to fund the base programs or abandon them.

"If that base funding erodes, what do we do with the enhancements that we're providing?" Goldberg asked.
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