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City of Seattle
Gregory J. Nickels, Mayor
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NEWS ADVISORY
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| SUBJECT: Nickels: City Budget Outlook Brightens
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FOR IMMEDIATE RELEASE:
9/26/2005 2:00:00 PM |
FOR MORE INFORMATION CONTACT:
Alex Fryer (206) 684-8358
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Nickels: City Budget Outlook Brightens
Strong growth means more money available
for basic services and important investments
SEATTLE - Mayor Greg Nickels’ proposed a 2006 budget today that includes
$55 million in additional tax revenue for investment in roads, public safety,
parks, human services and community development.
The budget is an important milestone for the city - it is the first time in
four years that the city has had a revenue surplus. In previous budgets, Nickels
made tough choices to cut spending and get city finances under control. Those
decisions are now paying off.
“This budget reflects a significant turnaround for our city,” Nickels
said. “We are investing in every neighborhood. We’re getting people
back to work in increasing numbers. We have laid a foundation that allows us
to build toward a bright future.”
Revenue is rebounding thanks in large part to an improving local economy that
is creating new jobs and opportunity in the city. The sales tax, business & occupation
(B&O) tax, and other sources are expected to generate $29 million more
for the City’s general fund next year than anticipated in the 2005-2006
budget approved last November.
Real estate excise tax (REET) revenues remain strong as well, providing $26
million more than forecast for infrastructure projects during the same period.
Nickels proposal uses the additional money to enhance core city services,
pay for high-priority items and one-time investments, and restore several programs
that had to be cut in recent years. Seattle will add:
- $1.8 million to hire more police officers and $2.65 million to improve
equipment.
- $1.3 million to hire more firefighters.
- $1 million for increased homeless services.
- $2.4 million to build additional low-income housing.
- $8.36 million to pave more streets, build more sidewalks and make other
critical transportation investments.
“Our economy is strengthening,” Nickels said. “Our approach
is working. We see results and we will continue working hard to bring opportunity
to all. That is great news for our community.”
Nickels said that despite the surplus expected for 2006, the city needs to
spend and invest wisely. Several economic challenges loom on the horizon, including:
- Potential federal cuts of several million dollars in community development
block grant funds, starting in 2007;
- The loss of up to $18 million annually in B&O tax revenues starting
in 2008 because of state legislation;
- The need for up to $9 million in 2009 to meet ongoing operations and maintenance
needs with the completion of the projects funded by the Pro Parks Levy; and
- Economists’ prediction of an economic downturn may come sooner than
expected because of rising fuel prices and the effect of Hurricane Katrina.
Despite the expected challenges, the city’s long-term fiscal health
is good and it has more than adequate reserves to meet its long-term obligations,
according to Finance Director Dwight Dively. The mayor’s proposed budget
adds to existing reserves and creates new replacement funds for some equipment
in the police department. The city’s very high credit rating was not
changed by the rating agencies despite the severe recession of 2001-2003.
Nickels has created a sustainable 2006 proposed budget for both the general
fund and other city funds, including the utilities. The proposed general fund
budget - which pays for services typically associated with city government,
such as police, fire, parks and libraries - is $760 million for 2006. The 2005
adopted general fund budget was $717 million. The total proposed budget (including
utilities) for 2006 is $2.9 billion. The 2005 total adopted budget was $2.8
billion.
The City Council will spend October and November reviewing the mayor’s
2006 proposed budget and capital improvement program (CIP). The budget and
CIP must be adopted no later than Dec. 2. State law requires Seattle adopt
a balanced budget. Since taking office, Nickels has closed a $120 million budget
gap while protecting basic services.
For more information, visit the mayor’s web site at www.seattle.gov/mayor.
Get the mayor’s inside view on initiatives to promote transportation,
public safety, economic opportunity and healthy communities by signing up for
The Nickels Newsletter at www.seattle.gov/mayor/newsletter_signup.htm.
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Office of the Mayor
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