Mayor on economic forecast: No cuts to human services, public safety
Nickels says upcoming budget will continue his priority to protect core services

SEATTLE – As the national recession continues, a new economic forecast for the city of Seattle projects a $72 million revenue shortfall in its 2009-2010 biennial budget.  The city has built up a $30.6 million rainy day fund, but will still need to identify at least $42 million in further cuts for 2010.

Mayor Greg Nickels will propose adjustments to the city's 2010 budget next month, but said today that he will address the revenue shortfall without impacting direct human services and public safety programs.

"I will deliver a budget for 2010 that continues to protect funding for direct human services and public safety, and in this historic economic downturn, it is significant that we are able to preserve our core services -- the result of years of careful budgeting and work with the City Council," said Nickels. "There are more difficult decisions ahead, but Seattle is in a better position because we have kept strong fiscal discipline and built up a substantial rainy day fund."

A survey of city officials earlier this year by the National League of Cities found 84 percent reporting financial difficulties, the highest percentage since the organization began taking surveys in 1985.  A report by the Pew Charitable Trusts on the budgets of 13 U.S. cities recently singled out Seattle as being "in the best fiscal situation."  The report noted that, unlike some other cities, Seattle is not considering tax increases. 

In fact, the mayor and two Councilmembers have proposed eliminating the Employee Hours Tax to encourage job growth.  Nickels also supported the Council's action to raise the threshold for the business and occupation tax, a move to assist small businesses in these difficult economic times.

When he first took office in 2002, Nickels dealt with a significant budget gap with only about $2.5 million in the rainy day account.  Nickels made conservative budgeting a priority and as the economy improved, he worked with the City Council to grow the rainy day fund to $30.6 million, the highest level ever.

The revenue shortfall will require cutting roughly 4.4 percent from the endorsed 2010 budget.  The city has proposed to the Coalition of City Unions a 10-day furlough program aimed at reducing the number of layoffs required in 2010.  If approved by union membership, the same program would be extended to non-represented city employees. The plan would save approximately $8 million from the general fund and up to an additional $12 million in utilities and other funds.  The mayor has already announced that senior managers, whose salaries were rolled back last year, will continue to have their wages frozen at 2008 levels in 2010.

The drop in general fund revenue has been led by a decline in sales tax and business and occupation taxes, which the Department of Finance now projects will be lower by $39 million in 2009 and $46 million in 2010, compared to estimates last November which were used to set to 2009-2010 biennial budget.

The mayor will deliver his 2010 budget to the City Council on Sept. 25, 2009.  The impacts of any proposed cuts will be smaller than they might have been because the mayor acted early in 2009, taking mid-year budget action by cutting $13.3 million in general fund expenses.  Many of those 2009 reductions will carry over to 2010, reducing the effect of declining revenues.

In 2009, the mayor eliminated 59 positions citywide, about half of which were vacant.  The mayor also instituted furloughs for professional staff in several departments and reduced expenses such as overtime and supplies.

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