Everett’s sales tax revenue is down, but cuts aren’t imminent

EVERETT — The city’s budget planners predicted sales tax collections would rise slightly this year.

Instead, sales tax receipts — the city’s second-largest source of revenue behind property taxes — are down about 16 percent, or $800,000, in the first two monthly sales tax reports of 2009 compared with the same period last year.

If the pace continues, Everett’s $505.6 million budget will be hit with a $4 million to $5 million shortfall by year’s end.

Unless things get dramatically worse, however, don’t expect service cuts, layoffs or hiring freezes, at least for now.

“We’re taking a very measured approach to declining revenue,” Everett Mayor Ray Stephanson said.

Part of the reason the city can hold its unhurried position toward the budget, he said, is because it began to control costs last year, when signs of a softening economy became apparent.

City department managers saved $4 million last year after the mayor requested midyear that they control expenses, said Debra Bryant, Stephanson’s budget director and chief administrative assistant.

The bulk of the savings came from keeping vacant jobs open, Bryant said. There are currently 42 vacancies out of the city’s budgeted work force of 1,208.

At the same time, the cost of existing city labor is increasing at a steady clip.

Most city employees will see 5.8 percent cost-of-living raises this year, adding $3.3 million to the city’s payroll. The raises were negotiated with city employee unions and also were automatically granted to city managers who are not in unions.

That figure doesn’t include merit raises for those employees or raises for employees of Everett Transit, Everett Utilities and the golf course. Those departments are supposed to support their operations by usage charges, as businesses do.

Despite bad news from the Boeing Co. in the form of layoffs and 787 Dreamliner order cancellations, the jet maker’s Everett plant continues to pump millions of dollars in taxes into the city’s coffers.

“Clearly, we are big-time fortunate to have Boeing in our city,” Stephanson said.

“But we have by no means dodged a bullet,” Bryant added.

Steady employment at a few other large employers in Everett — Naval Station Everett and Providence Regional Medical Center Everett — have also helped protect the city from the full taste of the sour economy.

The two recession-resistant institutions are also creating temporary construction jobs with multimillion-dollar construction projects now under way.

Stephanson said the city is taking serious steps to cut costs.

Before hiring to fill vacancies, city managers first need his blessing, and only positions deemed critical will be filled for now, Stephanson said.

The city is also redistributing workers from areas that have seen declining activity, like the planning department, to departments facing greater demand for services.

The mayor’s office is also reviewing all out-of-town travel requests. Bryant said requests to leave town are frequently being denied.

Some capital projects are on hold to save money. For example, the city is postponing the purchase of new self-checkout scanners at the library, a savings of about $340,000. Programs, Stephanson warns, could also end up on the chopping block if the city’s revenue continues to fall. Bryant said specifics have not been determined, but newly funded programs that have never been implemented would likely be the first to go.

The first of three budget amendments is expected to be voted on by the Everett City Council in late April.

Reporter David Chircop: 425-339-3429, dchircop@heraldnet.com.

Sales tax declines

January-to-February sales tax reports:

Everett

2008: $4.68 million

2009: $3.9 million

Lake Stevens

2008: $373,200

2009: $342,700

Mill Creek

2008: $372,000