(The Center Square) – Hinting at potential tax and fee increases, City Administrator Alex Scott warned on Thursday that cuts alone would not be enough to close the roughly $13 million general fund deficit.
He attributed much of the deficit to the insolvent Criminal Justice Assistance Fund, which pays for the city’s jail bills, stagnant tax revenue growth and a few unsustainable collective bargaining agreements.
He and Chief Financial Officer Matt Boston acknowledged a brief rebound in taxable activity as of late after sales tax revenue had largely plateaued in recent years, but exercised caution around its impact.
Scott stepped in as city administrator about a year ago and said the ongoing budget crisis has eaten up almost every waking moment since then. Budget staff presented a six-year budget forecast in July that projected the current deficit of $13.4 million could surpass $50 million by 2031 if left unaddressed.
“We are facing the stark reality that we will not be able to close this on cuts alone within the general fund,” Scott told Mayor Lisa Brown and the Spokane City Council on Thursday during a joint budget meeting. “and certainly, I think we all agree that our public safety departments are not going to be able to sustain the level of cuts, especially given the proportion that they make up of the general fund.”
The general includes about $270 million in spending, so he said the deficit represents about 5% of that.
Public safety departments, including police, fire, the courts and other related offices, account for roughly $190 million of those general fund expenditures, which Scott suggested would be difficult to cut down.
Roughly 90% of the general fund budget pays for personnel expenses. Spokane managed to reduce its total headcount last year for the first time since the 2008 recession, and he said it’s on track to do so again; however, cutting personnel further could result in potential service-level impacts to public safety.
“Not to beat a dead horse,” Scott said, referencing his conversations with Boston and the departments, “but … everyone’s operating at basically record lows in terms of the personnel capacity they have.”
Both officials have been meeting with the departments in search of cuts, but Scott said, “Spoiler alert, it’s not pretty and it’s not feasible in most cases just in terms of how close to the bone we already are.”
The city is also preparing to transition to a new emergency dispatch service after Spokane Regional Emergency Communications voted in June to part ways with the municipality. According to reporting by The Center Square, it may cost taxpayers around $100 million, requiring support from the general fund.
While Scott acknowledged that cuts alone won’t close the deficit, neither he, Boston, the council, nor the mayor explained how they would close the budget hole. Last year, they relied on what Scott called “low-hanging fruit,” in addition to some other cuts and voters passing a public safety sales tax hike.
He said the city has already taken steps to close the deficit, including centralizing services and cutting duplicates for about $1 million in savings, and reducing personnel costs through vacancy reductions and not allowing nonunion represented employees to buy out unused vacation and sick time for $2 million.
Scott noted another $3.5 million in potential savings by refinancing the city’s debt obligations. They are also renegotiating some of the collective bargaining agreements and looking for other efficiencies.
“There’s a lot more that’s not necessarily ready for prime time yet, but in the next days and weeks, we’ll be previewing that for you all well in advance of our October budget study session,” Scott told Brown and the council, “and certainly in advance of submission of the mayor’s proposed budget.”
“Obviously, it is top of mind for us to try to not be in this position again next year,” he said.
