Like many other medium and small cities in the state, the City of Tukwila faces immediate budget shortfalls due to the coronavirus pandemic.
City administrators says Tukwila is losing revenues from sales, gambling and utility taxes as a result of the ‘Stay Home, Stay Healthy’ order. The shopping mall within its borders is just one of the problems, say city officials.
The property tax deadlines have been delayed and state-sanctioned timelines for paying sales taxes have been extended. This means a delay for the city to receive its property and sales tax revenues.
The economic crisis will extend into 2021, at a minimum.
$12 million this year
Tukwila officials project the loss of $12 million in revenues this year and a loss of $6 million in revenues in 2021. Those losses of revenue losses mean there will have to cuts in spending, and that means an impact to city services.
State law requires certain city services, such as a chief law enforcement officer, and city planners to enforce the Growth Management Act.
Most city services are established by the Tukwila City Council based on community priorities. Law enforcement response times or human services financing are often subject to legal requirements. When a jurisdiction decides to provide fire services, the city must provide training, and other activities.
Tukwila’s adopted Strategic Plan provides much of the policy guidance for services. The city’s biennial budgets are developed to be in alignment with the five goals outlined in the Strategic Plan.
Funds based on pandemic
The federal government has provided some money for cities with 500,000 or more residents. The state is also distributing additional federal funds to cities based on population.
But with Tukwila’s population of 20,000 residents, its share is proportionately small, but it is important to know that the money is being made available to cover costs associated with the pandemic and not for lost revenues.
The Tukwila current budget shortfall has very little to do with pandemic-associated spending, and everything to do with lost tax revenues, say city officials.
Some of Tukwila’s enterprise funds are losing revenue, such as the water fund, which has fewer customers during the shutdown. Funds covering the city’s Public Safety Plan have already been committed and cannot be held back. Any inter-fund loans made from one fund – such as the sewer fund – would need to be paid back in a reasonable period of time and with market-rate interest.
Contingency money
Tukwila city government has both contingency and reserve funds, an unassigned fund balance. It is expected that more than half of the contingency money will be used in 2020 to deal with the budget shortfall. If the economy does not improve, any remaining contingency funds will be used up in 2021.
These funds must keep sufficient money on hand for cash flow purposes or dealing with future emergencies. It is neither prudent nor possible for the city to spend all of its contingency and reserve funds to address the current shortfall.
Cuts, hiring freeze
Consistent with other cities in the region, nearly 70 percent of the city’s general fund is spent on people. While all departments have slashed their budgets for items like supplies and professional services, it’s not enough savings to preclude staff cuts of some nature.
Tukwila has also enacted a hiring freeze, taken steps to control overtime costs, reduced all travel, furloughed part-time staff, and reduced capital projects.
These actions reduced city expenses by $4 million. Staff has identified an additional $2 million in other savings, such as delaying purchases for the city’s vehicle fleet.
From the $12 million shortfall, this leaves the Tukwila needing to find an additional $6 million in savings for 2020, and into 2021.
Assistance for people
Staff furloughed for a significant time, or laid off, have access to unemployment funds through the state’s Employment Security Division. As a part of the CARES act, the Coronavirus Aid, Relief, and Economic Security Act, affected staff will also receive an additional $600 per week through the end of July. This federal subsidy could potentially be extended as well.
Any staff member laid off due to this economic crisis will have return rights for 12 months. This allows them first access to their former position, should the city have the ability to refill the position.
The Tukwila city administration and City Council are working through a process to identify an appropriate ratio of contingency funds and service reductions, the latter which includes personnel reductions in some form. Contingency Funds will be used to fund a portion of the $6 million gap.
Tukwila’s labor contracts require layoffs unless union members agree to an alternative. It is also expected that layoffs, in accordance with the city’s labor contracts, will be needed. However, should the affected labor groups agree to furloughs, there is the potential to avoid layoffs at this time by accepting a 10 percent reduction in pay and time worked. The staff leadership has already agreed to a 10 percent pay reduction, saving more than $145,000 this year alone.
It is important to ensure that the city will maintain its required and necessary services, and prioritize other services in accordance with the adopted Tukwila Strategic Plan and community priorities.
