CITY BUDGET GAP WIDENS;
MAY REACH $60 MILLION IN 2003
August 26, 2002 - Mayor Greg Nickels announced today a worsening revenue situation in City
government. The city's latest revised revenue forecast shows the estimated General Fund budget
gap next year may reach $60 million, up from the May estimate of $50 million.
Less revenue than anticipated, coupled with continued spending pressures - including rising
health care costs - contributed to the widening gap.
"The latest forecast reinforces what I've been saying since I took office: we must get control
of spending now - city government simply must live within its means," Nickels said. "In the
2003-2004 budget, I plan to cut overhead first and direct services last, protecting basic
services as much as possible. More importantly, I will propose a sustainable budget to the
City Council next month."
City expenses since the mid-1990s have steadily increased while revenue growth has declined:
- Seattle has added about 1,000 full-time equivalent employees since 1998;
- Councilmanic debt (city-issued debt that does not require voter approval) has steadily increased since 1995;
- The city's employee health care costs have steadily increased since 1997;
- In 2001, tax revenue growth slowed considerably and barely kept pace with inflation;
this year, revenue growth is expected to fall far short of inflation; and
- In 2001, for the first time in more than 31 years, sales tax revenue was less than the
amount collected the previous year. (Sales, and business and occupation taxes traditionally
fall when the economy declines).
City Finance Director Dwight Dively emphasized that while the city faces a serious short-term
budget problem, the city's long-term fiscal health is good, noting it has more than adequate
reserves to meet its long-term obligations.
Nickels presents his 2003-2004 budget to the City Council Sept. 23. The Council is expected
to adopt the budget by late November once it concludes its deliberations. State law requires
the city budget be balanced.
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