On Wednesday, April 28, Tukwila Mayor Jim Haggerton released the following letter addressing the city’s 2010 budget:

April 28, 2010

Mayor Jim Haggerton

Dear Tukwila Residents and Businesses:

The City of Tukwila is embarking on a process to improve our financial stability. Over the next few months we will explore a variety of actions to better balance our budget for the long term. Because these actions could involve significant changes to the services we provide to residents and businesses, I would like to briefly give you some background information and explain how you can stay informed as we work through the process.

BACKGROUND
Cities in Washington have been challenged in recent years by statutory limitations on property tax revenue during a period when the cost of providing services has continued to grow. For some time, the robust growth of the overall economy and significant new development in Tukwila provided the ability to cope with these revenue and expense problems. However, Tukwila’s finances have been hurt in recent years by implementation of the State’s “streamlined sales tax” system and by unanticipated expenditures related to problems at the Howard Hanson Dam. With this difficult financial backdrop, the economic crisis of the past few years has seriously affected the City’s ability to continue operating as we have in the past. An extended period of declining sales tax revenue and a dramatic slow‐down in new construction (with resulting stagnated property tax revenue) require that the City take action.

The chart below illustrates the City’s recent revenue/expenditure history (2000‐2009) and forecasts revenues and expenses through 2015 based on current service and staffing levels. As illustrated, revenues and expenditures were relatively equal through 2004. From 2005 through 2007, revenues exceeded expenditures each year, allowing the fund balance (our “bank account”) to grow over this period. However, in 2008 revenues declined while expenditures continued to increase, requiring that the City draw from its fund balance. The gap between revenues and expenses is expected to widen under current and anticipated conditions requiring continued and growing “withdrawals” from fund balance.

Temporary expenditure reductions for 2009 and 2010, a new utility tax on city‐run utilities, significant (and unsustainable) cutbacks in capital expenditures and a new solid waste utility tax have provided some relief. However, even after these measures are considered, forecasts show that the City will deplete its budget reserves (“fund balance”) in 2013 or 2014 if it remains on the current course. This situation cannot be allowed to continue.

NEXT STEPS
The City Council and I have begun an intensive process to review a wide range of possible measures for closing the budget gap and setting the City on a more sustainable financial path. This will require evaluating ways to increase revenues and decrease expenses. These measures will have real impacts on the cost and type of services we provide to residents and businesses and on the employees who provide those services.

Over the next few months, the City Council will evaluate these potential measures to close the budget gap. If you would like to stay informed as the City Council explores these options, please visit the “City Budget Challenges” page on our city website (www.ci.tukwila.wa.us) and sign up for automatic notifications.

These are challenging times but I know we will find a way to a more stable future for our city.

Sincerely,
Jim Haggerton
Mayor