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Tacoma’s Budget Outlook
Do you want the good news first, or the not so good news? There's some of both.
That's beginning to sound like the theme for the City of Tacoma's biennial budget setting season that's getting underway now.
A presentation before the city council on June 10 set the stage for what the City is up against as it makes plans for the next two years. You can download the pdf for that presentation here, but here are some highligts:
- Statewide unemployment is down, and job growth across most sectors has been positive... but there are still many discouraged or underemployed workers not accounted for in those numbers.
- In Washington State as a whole employment rates have recovered to higher than 2007, and Tacoma isn't too far behind... but we aren't quite there yet.
- We're seeing strong employment numbers in Tacoma in education and health services... but fields like construction and manufacturing are still weak.
- Housing prices and home sales are rebounding from low points statewide... but although housing prices are up, they're still below pre-recession values.
- Personal income is up... but consumer confidence is still volatile.
- Inflation is low, and interest rates are near near historic lows... but access to credit to buy a home is still restrictive.
- Building permits have begun to rebound... but not to pre-recession numbers, especially not for residential permits.
- Washington State exports are generally beginning to rebound, and have stayed strong with China. No real but here, this is generally good news for Tacoma.
So we're slowly seeing economic recovery, but uncertainty is hurting the economy on a number of levels, keeping growth slow in job creation, personal income, consumer and business confidence, and the housing market.
The council also got a look at what a projected budget would look like at the current level of services provided in the city... and a look at some of the deferred maintenance that will be needed, and what that would do to the budget.
Revenues are predicted to increase at a slightly higher rate over the next half of the current decade than they have over the first half, outpacing spending if current levels of spending on services are maintained... but in order to achieve lower costs in the past few years, the City deferred maintenance and replacement of some City assets. The deferred maintenance includes things like replacement of vehicles in the City's fleet, maintenance of streets and City-owned facilities, and IT maintenance and upgrades.
When these replacements and maintenance issues are accounted for, the budget outlook looks a little more grim. For instance, if all vehicles due for replacement were to be replaced at once, it would total $16 million. It would also lead to a cyclical spike in costs over the years when many vehicles come due for replacement at the same time. To avoid both the huge one-time, and on-going costs, staff is recommending a "smoothing plan" that would replace vehicles in phases, at a cost of approximately $5 million per biennium.
Even with the "smoothing plan," when these fleet replacements are taken into account, along with deferred maintenance of facilities, including fire and police station maintenance and replacement of Tacoma Dome seating; IT upgrades; and streets maintenance, the budget gap grows significantly (see the dotted purple line in the above graph). And these numbers don't include other unfunded capital items and services, including a proposed eastside community center, the City's share of the cost of the ultimate expansion of the Link light rail, library upgrades, Neighborhood Council Innovative Grants, Broadway Center improvements. The addition of those projects bumps the budget expenditure line up even further.
The trick, of course, is to bring those lines together.
Community engagement meetings beginning in July will give you a chance to get up close with some of these numbers and ask staff your questions, but let's start now; what questions do you have about Tacoma's budget situation?Download Now
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