Olympia expects job cuts

By Matt Batcheldor | The Olympian • Published September 19, 2008

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OLYMPIA – The city could cut from 12 to 24 jobs because of a steep year-over-year decline in sales-tax revenue, City Manager Steve Hall said Thursday.

Statewide freeze

Gov. Chris Gregoire ordered a hiring freeze for state agencies Aug. 4, spurred by slowing tax collections.

The order to freeze hiring was spurred solely by slowing tax collections, said state budget director Victor Moore. The freeze The freeze could eliminate 1,951 jobs and save $90 million in the next fiscal year.

Gregoire also has said that she will consider moving some workers to a four-day workweek to save money.

In Tumwater

Tumwater will plug a $1 million shortfall in its 2009 budget — and avert 12 layoffs — by transferring $1 million from its capital facilities plan budget to the city's general fund, city officials say.

Because of the transfer, the city will shelve a planned expansion of the city police station at City Hall. The $1 million was earmarked to pay for the expanded station.

The capital facilities plan budget is partly financed by a 6 percent utilities tax. The $1 million being transferred represents about 2 percent of the 6 percent tax, said city administrator Doug Baker.

As for what to do in 2010 or beyond, the city will look at that in November or December, when officials finalize the 2009 budget.

The extent of the cuts won't be known for sure until the City Council passes its 2009 budget, which it must do by the end of December. No cuts have been made, but Hall said he has been warning employees for months about the difficult budget year ahead, to give them an opportunity to look for another job.

Assistant City Manager Subir Mukerjee said some employees have been told their jobs could be at risk.

Hall will give the council a clearer idea of the cuts he proposes at its meeting Oct. 7. The preliminary operating budget will be presented a week later. The council ultimately will decide where cuts are made.

Workers whose jobs were cut would have the first shot at other unfilled positions in the city, Hall said. He said he hopes that some of those employees could take vacant positions with the city's utilities, which get their revenue from utility fees, a more stable source of income. Or they could take more essential positions that would have to be filled anyway.

Hall said he hopes most of the city's approximately 600 employees will stay on and be able to find other jobs in the organization, with "one or two exceptions."

Councilman Joe Hyer, chairman of the council's Finance Committee, said employees would have to be qualified for other available positions to get them.

"I am confident that we are going to be able to balance the budget next year," he said.

It's unclear which departments will be cut. But one that might be hit is the city's Community Planning and Development department, which has seen a marked decline in building permit applications.

In troubled economic times, people are buying and building less. That means less money in sales-tax and development fees for the city, and the shortfall is much worse than expected. Similar problems have created a budget crunch in Tumwater and prompted a hiring freeze for state agencies in August.

In Olympia, sales tax, collected in June but reported last month, was down 23 percent year over year, Hall said in an e-mail to the staff. Development revenue received in the city's Community Planning and Development department was less than half of the city's projections.

Hall said city officials had anticipated a tough year and began reducing discretionary spending — for consultants, professional development and the like. And the city began freezing some open positions.

But Hall said he never expected anything like the revenue picture that's unfolding, and tougher action is necessary.

The city is also looking at other ways to save money — switching to cheaper fuels, delaying buying equipment and replacing furniture, scaling back travel and training.

He said the City Council could also aid the budget by raising fees for court, parks, classrooms and other rentals. Development fees may be raised.

Hyer, meanwhile, said that even with the cuts, he's unsure how long the revenue decline will last.

"It's very, very uncharted territory for the city of Olympia," he said.