Mayor’s 2010 Proposed - Seattle.gov Home · Vancouver Renton King Co ... • City’s “rainy...

Mayor’s 2010 Proposed Budget

City of SeattleDepartment of Financep

September 30 2009September 30, 2009

Economic and Revenue Overview

• U.S. is emerging from worst recession since the 1930s

– Recession began 21 months ago in Dec 2007Recession began 21 months ago in Dec. 2007

• 6.9 million jobs have been lost, 5.0% of total

• Household wealth has declined by more than $13 trillionHousehold wealth has declined by more than $13 trillion

– GDP growth is expected to resume in the current quarter

– Employment to turnaround in 2010 Q2

• The recovery is expected to be weak

Credit will be tight– Credit will be tight

– Consumers are under stress due to job loss and decline in wealth

– Housing market remains weak, plagued by foreclosures

22

Housing market remains weak, plagued by foreclosures

9/30/2009 Mayor’s 2010 Proposed Budget

6 0

6.5

Ratio of Household Net Worth to Disposable Income

5 0

5.5

6.0

4.0

4.5

5.0

3.5

60 Q

1

63 Q

1

66 Q

1

69 Q

1

72 Q

1

75 Q

1

78 Q

1

81 Q

1

84 Q

1

87 Q

1

90 Q

1

93 Q

1

96 Q

1

99 Q

1

02 Q

1

05 Q

1

08 Q

1

• Decline from 2007 Q2 peak to 2009 Q1 is 26 6%

19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20

Source: Federal Reserve Board.

33

• Decline from 2007 Q2 peak to 2009 Q1 is 26.6%.


• Local downturn has been comparable to U.S.

– Through August 93,300 jobs (5.0%) lost in 4‐county region

• Job loss steepest in blue collar industries

– Housing downturn has been less severe in region than U.S.

• Local recovery is expected to progress slowly

– Expect 2010 to be weak with improvement in 2011

– Construction will be slow to rebound

• Recession’s impact on City revenue has been severe

– Through July, 2009 sales tax revenue is down $10.7 mil. (12.0%) from same period in 2008

– City expects a $30.7 mil. decline in sales and B&O tax revenue in 2009

44

– Real estate excise tax (REET) revenue has fallen by 70% from 2007


15%

Real* Taxable Retail Sales: Year‐over‐Year Growth Rate

5%

10%

0%

5%

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

‐10%

‐5% 1975 Q

1977 Q

1979 Q

1981 Q

1983 Q

1985 Q

1987 Q

1989 Q

1991 Q

1993 Q

1995 Q

1997 Q

1999 Q

2001 Q

2003 Q

2005 Q

2007 Q

2009 Q

‐15%

10%

*Inflation adjusted.


REET R d F t b S t

80,000,000

REET Revenue and Forecast by Sector

50,000,000

60,000,000

70,000,000

ResidentialCondo

20 000 000

30,000,000

40,000,000

50,000,000Commercial

0

10,000,000

20,000,000


Sales Tax Revenue: Year‐over‐Year Growth Rate For Most

Redmond

Spokane

Recent 3 Quarters*

Tukwila

Tacoma

Olympia

Seattle

Vancouver

Renton

King Co. Metro

Tukwila

Kent

Everett

Lynnwood

Bellevue

‐20% ‐18% ‐16% ‐14% ‐12% ‐10% ‐8% ‐6% ‐4% ‐2% 0%

Kent

*2008 Q4 ‐ 2009 Q2. Source: WA Dept. of Revenue.


Forecast RevisionsHow much did forecasts for 2010 change from Sept. 2008 to Sept. 2009?

Sep‐08 Sep‐09 PercentSep 08 Sep 09 PercentRetail sales tax Forecast Forecast ChangeSeattle 161.1 mil. 136.4 mil. ‐15.3%Washington* 8 03 bil 6 87 bil ‐14 4%Washington 8.03 bil. 6.87 bil. 14.4%King Co. Metro 458.6 mil. 392.8 mil. ‐14.3%Bellevue 55.6 mil. 46.3 mil. ‐16.7%

REETSeattle 42.9 mil. 21.6 mil. ‐49.7%Washington* 668 mil. 441 mil. ‐34.0%gKing County 5.00 mil. 3.34 mil. ‐33.2%

*State forecasts are for July – June fiscal year; all others for calendar 2010


State forecasts are for July June fiscal year; all others for calendar 2010.

Mayor Nickels’ overall approach to the 2010 Proposed Budget:

• Make public safety & direct human services General Fund’s highest priority• Make public safety & direct human services General Fund’s highest priority

• No general tax increases

• Assess potential effects of budget changes on historically disadvantaged hb hcommunities and neighborhoods

• Keep utility rate increases to a minimum

• Review of span of control & eliminate management positions where possible p g p p

• Reduce the size of the vehicle fleet (approximately 193 vehicles cut); focus on energy‐efficient vehicles

• Maintain conservative financial practices including funding the EmergencyMaintain conservative financial practices, including funding the Emergency Subfund at the maximum level allowed under state law ($46.6 million for 2010)

• Freeze department‐head salaries at 2008 levels for both 2009 and 2010

• Use Real Estate Excise Tax (REET) funds mostly for asset preservation (“major• Use Real Estate Excise Tax (REET) funds mostly for asset preservation ( major maintenance”)

• Use federal stimulus funds mostly for new efforts that will create jobs, rather than replacing existing City funds


than replacing existing City funds

9

Fiscal Assessment

• Budget gap for the General Subfund in the current Biennium is roughly $72.5 million, after counting the 2009 midyear budget reductions

• Gap represents approximately 8% of the 2010 Endorsed Budget

P d F l h f 2010 i t l $6 5 illi• Proposed Furlough for 2010 saves approximately $6.5 million in General Subfund costs, and $11.6 million in costs for other funds

• City’s “rainy day” fund (the Revenue Stabilization Account) has $30.6 million; $25.4 million is used to balance 2009‐2010

• Using fund balances like the rainy day fund and one‐time savings (about $9.4 million) to balance the budget in 2010 creates a significant potential gap for 2011

9/30/2009 Mayor’s 2010 Proposed Budget 10

Balancing the 2009‐2010 GF Budget2009 Revised 2010 Proposed

Beginning Unreserved Fund Balance 25,300,000 1,096,311

2008 expenditures carried fwd (8 770 669)2008 expenditures carried fwd (8,770,669) ‐Total Unreserved Fund Balance 16,529,331 1,096,300

Revenues GSF Revenue Forecast 875,836,021 888,478,000 Fund balance transfers 6,385,979 ‐Use of Rainy Day Fund 8,874,000 16,480,000 Total Revenues 891,096,000 904,958,000

Expenses GSF Appropriations (873,323,480) (873,314,347)O i d i (9 423 576)One‐time reductions (9,423,576)Ongoing reductions (16,239,673)2010 furloughs (6,498,805)

subtotal (873,323,480) (905,476,401)Expenditure Adjustments 2009 1st Quarter Supplemental Ordinance (1,246,000)2009 2nd Quarter Supplemental Ordinance (2,100,000)2009 2nd Quarter Supplemental Ordinance – PRF (39,190,313)2009 3rd Quarter Supplemental Ordinance 6,078,747 2009 Other Ordinances (14 315 000)2009 Other Ordinances (14,315,000)2009 midyear reductions 9,204,000 Expected Savings 8,363,026 Total Expenses (906,529,020) (905,476,401)

Ending Fund Balance 1,096,311 577,899


Reserves against fund balance ‐ (464,000)Ending unreserved fund balance 1,096,311 113,910

General Fund Budget Changes2010 Endorsed – 2010 Proposed2010 Endorsed – 2010 Proposed

Fire +0.2%Police -1.9%Law -3.7%

General Fund Total -4.4%

Municipal Court -4.7%Library 5 2%Library -5.2%Parks -5.7%Legislative -5.9%Human Services Dept. -5.9%Dept. of Executive Admin. -6.1%Dept. of Finance -6.1%Executive Offices -6.2%Dept of Planning & Development -6 5%Dept. of Planning & Development 6.5%Personnel -7.9%Seattle Center -8.7%Dept. of Neighborhoods & NMF -9.5%S ttl D t f T t ti 10 5%


Seattle Dept. of Transportation -10.5%All Other -11.6%

General Fund Budget Changesg g1997 – 2010

Seattle Dept. of Transportation 291.1%Library 97 3%Library 97.3%Fire 95.4%Police 94.2%Parks 89.4%Human Services Dept. 86.3%

General Fund Total 78.6%

Municipal Court 66.3%Dept. of Planning & Development

61.4%DevelopmentLaw 55.9%Internal Services 23.1%Debt Service 12.0%


Healthcare costs continue rising despite prudent management

City of Seattle Health Care Subfund

120 000 000

140,000,000

160,000,000

60 000 000

80,000,000

100,000,000

120,000,000

tal E

xpen

ses

0

20,000,000

40,000,000

60,000,000

Tot

0


Growth vs Prior Year Actual

DPD permit activity has declinedDPD permit activity has declinedDPD Building Development

Actual Permit Revenue & Intake Volume

7.0

8.0

28

32

5.0

6.0

20

24

Thou

sand

s

Million $

3.0

4.0

12

16

T

2.08

2005 2006 2007 2008 2009 (est) 2010 (est)

Revenue ($ millions) Intake Volume (1,000s)


DPD budget cut as a resultDPD budget cut as a result

440

60

DPD Funded FTE and Non‐GF Budget

400

420

440

56

GF

360

380

400

48

52

FTE

ns $ Bud

get, non

‐ G

320

340

360

44

48

Millio

300

320

40

2005 2006 2007 2008 2009 2010*Budget ($ millions) Funded FTE


*NOTE: 22.5 FTE are proposed to be unfunded in 2010and have been removed from the FTE display.

Recession byproduct: City Light’s wholesale l l h fenergy sales lower than forecast

Net Wholesale Energy Revenue ($ millions)

140

160

80

100

120

20

40

60

0

originally projected for 2009‐10


actuals for 2002‐08 / current projections for 2009 and 2010

City Light has dramatically improved its financial situation i th W t C t i i i 2000 d 2001since the West Coast power crisis in 2000 and 2001

90%$70.00

City Light Average Rates and Debt‐to‐Capitalization

75%

80%

85%

$60.00

$65.00

A R t il R MWh (L ft S l )

60%

65%

70%

$

$50.00

$55.00 Average Retail Revenue per MWh (Left Scale)

50%

55%

$35 00

$40.00

$45.00 Debt‐to‐Capitalization Ratio (Right Scale)

40%

45%

$30.00

$35.00


City Light rate proposalCity Light rate proposal

• Rate increase of 8 8% effective January 1Rate increase of 8.8% effective January 1, 2010

• Power Revenue Adjustment Mechanism• Power Revenue Adjustment Mechanism (PRAM)

Fi i l li h• Financial policy changes

• Significant operating and capital budget reductions


SPU facing financial challenges tooSPU facing financial challenges too

$270.1

$300.0

SPU Revenues (Excludes Bond Proceeds)(In millions of $; Total Change = ‐$29.7M)

$209.3

$166.4

$211.7

$249.8

$154.6

$200.0

$250.0

$

$

$100.0

$150.0 2010 Endorsed

2010 Proposed

P i d i

$0.0

$50.0

WF DWF SWF

Primary revenue drivers:• All Funds: continued economic downturn • Water Fund: $12.9M in additional revenue related to Lane v. City of Seattle• Drainage & Wastewater Fund: no rate increase in 2010


• Drainage & Wastewater Fund: no rate increase in 2010 • Solid Waste Fund: Loss of about $3 million in expected Green Fee revenue

20

Recession required cuts throughout ’ b dSPU’s budget

$869.8$900 0

$1,000.0

SPU Budget (All Funds)(In millions of $; Total Change = $63.4M)

$612.3 $600.0

$806.4

$600.0

$700.0

$800.0

$900.0

$257.5

$206.4$200.0

$300.0

$400.0

$500.0 2010 Endorsed

2010 Proposed

Budget Reduction Highlights:

$0.0

$100.0

Operating Capital Total

udget Reduction Highlights:• Eliminate 40 vacant positions• Significant cuts to Solid Waste operating programs• Significant cuts to Drainage & Wastewater capital projects


Significant cuts to Drainage & Wastewater capital projects• Furlough savings

21

REET is focused on major maintenance of h i ’ i l f ili ithe City’s capital facilities

$25 000$30,000

REET I and REET II Appropriations by Department ($ in thousands)

$10 000$15,000$20,000$25,000

$0$5,000

$10,000


CEN DPR FFD SDOT SPL

Position abrogations in 2010 Proposed BudgetR t d N R t dRepresented Non-Represented

Department Filled Vacant Filled Vacant TotalCity Light 18 23 19 8 68Executive Administration (DEA) 1 3 2 1 7Fire 0 8 1 0 9Fire 0 8 1 0 9Fleets & Facilities (FFD) 13 5 7 1 26Human Services (HSD) 2 8 4 8 22Information Technology (DoIT) 1 0 4 3 8Law 0 1 0 4 5Municipal Court 2 8 2 2 14Neighborhoods (DON) 0 2 2 2 6Parks & Recreation 9 13 2 3 27Personnel 0 0 2 1 3Pl i & D l t (DPD) 5 24 0 0 29Planning & Development (DPD) 5 24 0 0 29Police 7 2 4 2 15Seattle Center 2 8 5 0 15Seattle Public Utilities 0 30 0 10 40Transportation (SDOT) 1 9 0 4 14Transportation (SDOT) 1 9 0 4 14All Other 0 0 1 1 2TOTAL 61 144 55 50 310Includes positions cut in mid-2009 and additional ones eliminated for 2010 Proposed Budget.

• 116 estimated layoffs at this time


• 116 estimated layoffs at this time • Furloughs save an estimated $6.5 million from the General Fund; about $18 million

across all funds

Mayor’s 2010 Proposed - Seattle.gov Home · Vancouver Renton King Co ... • City’s “rainy...

Documents

Transcript of Mayor’s 2010 Proposed - Seattle.gov Home · Vancouver Renton King Co ... • City’s “rainy...