A real estate slump and softening national economy are starting to impact the City of Tacoma’s ability to tackle a handful of capital projects, according to Tacoma City Manager Eric Anderson.
“I’m concerned because of the volatility of the economy,” said Anderson, who spoke Tuesday during Tacoma City Council’s weekly noon study session. He was joined by Finance Director Bob Biles, who gave an update on the city’s biennium budget.
According to Biles, funds collected from the real estate excise tax (REET) have dropped since last fall, when the city collected $741,000 in September, $534,000 in October, and $395,000 in November. In 2008, REET-generated funds are down 56 percent. By year’s end, Biles expects the city will collect half of the projected $10 million in REET funds.
It’s a similar story in Pierce County government, where a drop in sales tax and interest rate revenues, and a $4.5 million gap in the planning and land services department, has led to its own shortfall. “The County is having trouble, too,” said Anderson. “We could just as easily be in the same situation with just a little twist in the economy.”
City capital projects that could be impacted by the dour economy include improvements to trails, bike paths, neighborhood fire stations, surface streets, and Cheney Stadium.
Still, Anderson and Biles noted the city’s General Fund appears to be on target to break even this year.
“I suspect we will have a ‘hold-the-line’ budget [by year’s end],” said Anderson. “I believe we will meet our budget.”
City Council is expected to revisit the budget during a study session June 24. During that meeting, it will also consider preliminary priorities for capital projects.