In a briefing to the council’s budget committee this morning, city budget staff said they expect the city will bring in approximately $11 million less than previously predicted, for a total shortfall next year of about $67 million, compared to a previous forecast predicting a shortfall of $56 million. In 2012, the city expects to bring in about $13.5 million less than expected. The difference, which will have to be made up with layoffs and cuts to city programs, results from lower property, business, sales, and other taxes.
However, budget officials told the council, if the country ends up in a “double-dip” recession—a recession in which a short recovery is followed by another recession, instead of ongoing economic expansion—the city could end up losing another $12.7 million in 2011 and $28.2 million in 2012. “This recession is a different beast than we predicted,” city budget director Beth Goldberg told the council.
Although the city has also revised its projections for this year downward by about $8 million over the $11 million that’s already being made in midyear budget cuts, Goldberg told PubliCola the city had made up the difference with onetime revenues and by lowering some expenditure assumptions, such as the possibility that the jail population would increase.
In 2012, Goldberg added, the city will probably be able to make up the $13.5 million by preserving the cuts it will make next year. “That’s a tiny bit of good news: With the ongoing [cuts], in 2012, we’ll still be looking at the status quo.”
Additionally, three initiatives on the ballot could impact the city’s budget. If Initiative 1107 passes, removing the sales tax on candy, gum, and bottled water, the city would lose an estimated $1.2 million in 2012; if I-1100 passes, the city would lose between $2 million and $4 million; and if a King County initiative to increase the sames tax by 0.2 percent passes, the city would gain an estimated $8.7 million.
Polling on the sales tax increase showed 57 percent opposition in King County; meanwhile, a plurality (42 percent) of voters have said they support repealing the snack taxes, and a strong majority say they support both liquor privatization initiatives.
“If inflation starts going up it’s a real problem for us because about 25 to 30 percent of our revenue streams are from property taxes and property taxes are limited to one percent of property value,”
