Sluggish economy touches City Hall budget

A significant decline in real estate excise taxes collected by the City of Tacoma could put a number of municipal capital projects on hold, according to a budget update Aug. 5 at City Hall.

Data compiled by the City’s budget and finance department shows the 2007-2008 biennium budget projected approximately $19.9 million in real estate excise taxes (REET), which are collected during property sales, through the end of this year. However, the office now projects $12.9 million will be collected by year’s end.

Similarly, the city collected $4.8 million in REET money through June 2007. Through June 2008, the city has collected $2.2 million. On average approximately $800,000 per month in REET money last year. So far this year, that average is approximately $319,000.

“It’s a very dramatic drop,” said finance director Amy Palmer, who presented the budget update Tuesday during City Council’s weekly study session.

The shortfall could impact a long list of capital projects such as expanded trails, street improvements, and more bike paths that were included in the biennium budget, but have yet to be funded.

“Clearly we have some rough water ahead of us,” said Tacoma City Manager Eric Anderson. “It’s going to be a difficult close to this biennium, and we are anticipating it will be a difficult next biennium.

“It will get worse,” he added.

Anderson told councilmembers he anticipated the city would face an ongoing revenue shortfall beyond 2009. To that end, he suggested the city use money collected in a “fund balance” to carry it through 2011.

As far as completing a long list of capital projects, Anderson said councilmembers should ask what can and cannot realistically be funded.

“Honestly, the money isn’t there,” said Councilmember Mike Lonergan. “It’s only there on a piece of paper.”

On Nov. 4, the city is expected to review the proposed 2009-2010 biennium budget. It will also hold budget workshops in November and December before the budget is adopted Dec. 9.