GH facing budget gap, working on options

Forecast shows deficit growing wider because of falling tax revenues

Nate Hulings

of the Gateway

The City of Gig Harbor is “on top” of a looming $1.8 million budget shortfall for the 2010 budget, a city official said last week.

Rob Karlinsey, Gig Harbor’s city administrator, said dismal revenues and forecasts showing steady decreases in the general fund have himself and Mayor Chuck Hunter working on a new gameplan to balance the 2010 budget.

Karlinsey plans to present a “menu of options” to the city council at the July 13 meeting.

Since plans are not final, Karlinsey said he was hesitant to go into detail but noted the proposal may include a combination of furloughs and capital program cuts, essentially freezing building projects and road improvements.

The city also has frozen all non-essential equipment and office supply purchases.

The mayor’s proposed 2010 budget should be ready by fall.

The city has four funds: general, street, utility and parks. The general fund, which is the largest contributor to city revenue, is largely fueled by sales and liquor taxes. It’s also the fund that is forecast to be hit the hardest.

Karlinsey reported the forecast for all four funds during a June 15 city council budget workshop. Although there’s a projected increase in the general fund for 2009 and ’10, forecasts for 2011-14 show a rapid decrease in beginning fund balances.

After 2010, the fund balances shrink significantly, peaking with a forecast $5.15 million decrease by 2014.

Forecasts are based on financial assumptions made by the city including no change in staff levels, programs or major capital replacements.

Karlinsey warns that forecasts are not proposals: They only reflect the aforementioned assumptions and a status-quo mentality — a mentality he says the city can no longer use if it wants to balance the budget.

“Right now, the focus is on 2010, but we have to look beyond 2010, too,” Karlinsey said. “We have to fix the problem long-term.”

The city has had two rounds of budget-saving cuts since last fall.

Last fall, the city reduced three employees from full-time to half-time, and four full-time positions were eliminated entirely.

This March, after discovering lower-than-expected revenues, the city cut $400,000 from the general and street operations funds. Karlinsey said those cuts froze overtime, training, supplies and equipment.

The proactive measures show the city understands the challenges, he said.

“We’re on top of it,” he said. “We’ve been aware of this budget gap for a lot of months now. We’ve, for the last little while, the last few months or so, been defining the problem.”

Mark Hoppen, former Gig Harbor city administrator and current candidate for Gig Harbor City Council Position 1, has been the most outspoken critic of the city’s handling of the budget.

During public comment at the June 22 city council meeting, Hoppen chastised the city for a budget problem he deemed not “very entertaining.”

“You didn’t listen, and now you’re going to pay the price for it,” Hoppen said at the meeting.

He also presented figures showing the need for staff cuts and called on the city to develop a plan as soon as possible.

Hoppen points to heavy reliance on sales tax figures and not enough emphasis on retail investments as major culprits to the budget issue.

Karlinsey said staff cuts aren’t the only option.

“Bottom line, we have to have a balanced checkbook at the end of the day,” Karlinsey said. “Unlike the federal government, we can’t spend more than we bring in.”

The city already has initiated a voluntary furlough plan, and two city employees have said they will take a few unpaid days off.

Reporter Nate Hulings can be reached at 253-853-9243 or by e-mail at nate.hulings@gateline.com.