A sluggish economy, rising fuel costs and slowing home construction have punched a $5.2 million hole in the city’s revenue projections for the year.
Also, another factor is the revenue the city will receive that’s earmarked for the Benson Hill annexation area hasn’t yet arrived, although the city is already providing services to the area. That is a cash-flow problem which is expected to go away next year.
But, the City of Renton is not facing a budget crisis, according to its new finance director. Still, administrators are being asked to delay non-essential spending and concentrate on core services.
“I have asked the city’s administrators to restrict most staff hiring, including positions previously approved in the budget,” said Mayor Denis Law.
The City Council was briefed on the budget Monday night.
Like Renton, other cities across the region are facing similar revenue shortfalls and are looking closely at their spending.
“Unfortunately, Renton is not immune to these factors and we are experiencing similar trends here,” said Iwen Wang, administrator, Finance and Information Services.
“Our revenues for the first half of 2008 are below budget projections and our forecasts show this pattern to continue into 2009,” she said.
She called the shortfall “substantial,” but it’s not unmanageable.
“We do think we can make up this $5.2 million,” Wang said. Helping is the fact that typically departments each year save about 3 percent of their budgets, she said.
The city receives revenue from a number of sources, relying most heavily on property taxes and the sales tax to pay for its daily operations. Sales-tax revenues haven’t declined but they aren’t growing as fast as projected – despite new businesses coming to the city.
And, of course, costs are going up as revenues are declining.
For example, through July the city has spent $270,000 more on fuel costs than it did during the same period in 2007, a 35-percent increase.
The $5.2 million represents about 5 percent of the city’s $100 million general government budget, which funds the day-to-day operations of the city and is most susceptible to swings in the economy.
The city is budgeted to spend about $240 million in total this year. By law, the city must balance its budget every year and it can’t pull money from budgets with a designated revenue source to make up for shortfalls in its general government budget.
Law has begun the process of preparing a budget proposal that he will deliver to the City Council in October.
A large part of the city budget includes salaries and other expenses for employees, who are responsible for providing basic city services such as police, fire and emergency services, street repair, parks and recreation, customer service and more, according to city officials.
With the current economic condition, costs are expected to
increase by nearly 6 percent next year.
“Make no mistake about this. We have a very well-run city,” said
Law. “Smart investments have helped us, and many great things are
happening in Renton. Our prudence during the boom years will help us
weather the uncertain times ahead, and we will continue to provide high
quality services, programs and infrastructure.”
Dean A. Radford can be reached at 425-255-3484, ext. 5050, or at dean.radford@rentonreporter.com.
