Schell says further budget cuts likely

Schell says further budget cuts likely

Wednesday, October 17, 2001

By KERY MURAKAMI
SEATTLE POST-INTELLIGENCER REPORTER

Seattle Mayor Paul Schell yesterday told department directors the city will probably have to find an additional $12 million in budget cuts next year.

In a related move, Councilwoman Jan Drago, who chairs the council's Budget Committee, said layoffs may be considered.

City budget director Joan Walters said it was too early to tell if layoffs would be necessary, but she said the budget picture has worsened dramatically. The slowing economy had already forced the city to institute a hiring freeze and dip into reserves for $3 million to balance this year's budget.

The September terrorist attacks and Boeing's announcement of massive layoffs worsened matters. One indication: Walters said the city estimates it will collect 6 percent less in sales tax revenue this year than last.

She likened it to the state's 1991 economic downturn -- "but in a more condensed period."

The city doesn't know exactly how much of its $626 million budget may have to be cut. It won't get a glimpse of how sharply sales and business and occupancy taxes dropped after the Sept. 11 attacks until November -- around the time the city is supposed to write its budget.

But Walters said a best guess, based on national and local economic forecasts, is that the city will have to find an additional $7 million in cuts by year's end. It would have to cut $12 million more next year. And if statewide voters pass the Initiative 747 tax limitation measure on Nov. 6, the city would have to cut still more -- $8 million -- from next year's budget -- a total hit next year of $20 million.

Schell was unavailable for comment late yesterday. His spokesman, Roger Nyhus, said city officials were only beginning to look at cuts, but said Schell would preserve police and fire services, and try to spare top priorities such as transportation, social services, the environment and human services.

Walters declined to speculate where Schell will propose cuts. But in a memo yesterday, Schell asked department heads to propose cuts of 4 percent before Oct. 29. Schell is scheduled to propose a budget to the City Council a week later, on Nov. 8.

Walters said a 4 percent across-the-board cut, exempting police and fire services, would save $9 million to $10 million

Drago said the council will discuss its options -- including layoffs -- at a budget retreat tomorrow. She said layoffs would have to be on the table just to reach the 4 percent across-the-board cuts.

P-I reporter Kery Murakami can be reached at 206-448-8029 or kerymurakami@seattlepi.com

Add P-I Local headlines to