Shortfall claims are not what they seem

uite frankly, I can’t decide which of these two options is scarier: Either candidate for Everett mayor Ray Stephanson truly does not understand the strategic budgeting tool used by the City of Everett or he is deliberately misrepresenting its use and meaning.

In his mailings, telephone calls, handouts and statements to Everett voters, he claims that “City Hall forecasts a $51.2 million shortfall/deficit by 2008.” This is simply not true. The strategic budget is a tool that frequently predicts potential deficits that, in fact, do not occur. It is not a forecast. Rather, it is a helpful modeling tool that provides the city with early identification of potential revenue shortfalls so that appropriate steps can be taken to end a budget year in balance.

The strategic budget is analogous to a weather report that predicts a hurricane. Neither is a predictor of actual results. Both are intended to be an alert so that steps can be taken to avoid potential damage.

In 1998, for example, the strategic budget predicted a deficit of approximately $8 million for 2003. Not only is there no 2003 deficit, there’s a 2003 surplus of roughly $700,000 to add to the already extremely healthy cash carry forward balance from previous years. With its $22 million cash carry forward balance (surplus), untouched “rainy day” reserve, A-1 bond rating (Moody’s), very little encumbered debt, the city is in excellent financial condition.

Retired Executive Director

City of Everett

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