EVERETT — The year’s barely half through, and Everett leaders are worrying about things they’d rather not think about: layoffs, furloughs and substantial service cuts.
None of those are planned — yet.
Except for December, each of the past 12 months has ended with the city pulling in less money than expected. Total revenue during that period has come up $5 million short of city projections, city figures show.
“Month over month we are bouncing along the bottom,” said Everett’s chief financial officer, Debra Bryant. “When we think we’ve seen some improvement our hopes are dashed the following month.”
City officials say the problem isn’t spending; it’s the anemic economy sapping revenues.
“Even though we’re seeing a smattering of good news, we’re not seeing the recovery to support municipal operations,” Mayor Ray Stephanson said.
Officials kept the city solvent by aggressively trimming the budget and lowering expectations for tax revenue. They knew 2010 would be tough, so they dug out the hacksaw and chopped $6 million from what they’d spent the year before.
That included suspending cost-of-living raises for most city employees and stopping payments into the police and fire pension funds for a year. They planned to spend about $112 million this year.
City leaders say revenue continues to come up short of projections, already totalling about $2 million off by the end of May. More than half of that shortfall — $1.3 million — can be traced to weak returns from the business and occupation tax.
More than 8,500 businesses in Everett pay taxes on gross revenues at a rate of one-tenth of one percent of revenue — that’s half of what the state allows cities to charge but it was projected to bring in $15.7 million this year. Meanwhile, sales tax is down about 4 percent, off about $372,000.
If the trend continues, Everett’s Bryant said the city will have to “take more drastic measures.” By that, she means reducing city staff and making the sort service cuts the public will feel.
Department heads already have been asked to find more places to chop. The city’s administration cut a fifth of its own budget, for instance.
All but the most essential city positions are being held open if someone leaves a job. Right now, 19 city jobs remain unfilled.
Stephanson said the city is trying to avoid cuts to basic city services. Public safety remains the city’s top priority, he said. As leaders build next year’s budget, managers are getting the message that this year’s trims may remain through at least the end of 2011.
The city plans to continue with major projects, such as the Riverfront development and a planned downtown plaza. The money for the city’s projects has been budgeted in advance and the city has contractual obligations that must be fulfilled, she said.
The only revenue stream that is up are fines collected from parking tickets and enforcement of traffic laws. By the end of May, the city had collected $115,000 more than it had anticipated this year.
“We know we have to make these adjustments in the expense side of the house, which is what you would do in your own household,” she said.
Everett is in better shape than some communities because city leaders took action in 2004 to bring spending in line with revenue. They also developed a policy to maintain a 20 percent reserve fund, which has to be repaid if used.
City leaders will vote on a budget amendment later this summer. By reining in spending and cutting another $2.5 million, Bryant hopes it will be enough to close the gap.
Debra Smith: 425-339-3197, dsmith@heraldnet.com.
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