Published 7:40 am Saturday, November 1, 2008
Need more proof the nation’s sick economy is affecting more and more people, not to mention local governments?
Look no farther than the City of Washington. When an economy is ailing, money is not spent as freely as when the economy is robust. When less money is spent by consumers, less sales-tax revenue is generated. States, counties, cities and towns prepare their budgets based on estimates of revenues from several sources. When those revenues come up short, the states, counties, cities and towns either must replace those revenues with other revenues or reduce costs.
That’s the position Washington finds itself in, according to a memorandum from City Manager James C. Smith to Mayor Judy Meier Jennette and the City Council. And if Washington finds itself in such a position, it is likely other governmental entities such as states and counties will face similar situations.
Washington has been struggling with its fiscal health in recent years. Just when it seemed like the city’s finances were on the road to recovery, the economy turned sour. That’s the bad news for the city.
Now for the good news. The city manager, working with city staff, has come up with proposed appropriation adjustments. His proposal is to reduce city expenditures where possible to reflect the expected loss of revenue caused by the current recession. As soon as he realized the problem, he began working on a way to solve it.
The city’s challenge in the face of this expected shortfall in revenue will be to reduce expenses without cutting back on most services it provides and lessening the quality of those services. As Smith and the City Council have said in the past, public safety is the one area in which the city will not compromise when it comes to providing services.
The estimated loss in revenue from several sources — sales tax, utility franchise tax, building permits, privilege licenses, interest income and Powell Bill funds— is just under $420,000. That loss can be offset, to some degree, by $196,368 in annual rent the city receives from Impressions Marketing Group for its use of the former Hamilton Beach/Proctor Silex site the city owns.
That still leaves $221,602 to be accounted for, which is the amount of reductions Smith’s plan calls for when it comes to spending by city departments.
Washington taxpayers are not shy when it comes to voicing their opinions on how the city spends the money they put in the city’s coffers. They should voice criticism when that criticism is warranted. On the other hand, when city officials take appropriate steps to reduce spending when revenues do not reach estimated levels, that deserves recognition.
When the city manager, mayor and council put together the current budget last spring, they did not know then the nation’s economy would be in a world of hurt at this point in the current fiscal year. The economy could get worse before it gets better.
And if the economy gets worse before it gets better, Washington residents can take some measure of comfort that the city has a plan to minimize the effects of a sick economy on its fiscal health.