Budget concerns derail Lacey City Council work session

The Lacey City Council was set to discuss a transportation benefit district — a funding tool to help pay for road work — when a more pressing issue reared its head Thursday night.

The city’s general fund budget is facing a possible shortfall in the area of $975,000 for 2015, which led Mayor Andy Ryder to announce during the work session that now is not the time to talk about the transportation benefit district.

“Discussing the next steps of the (transportation benefit district) is probably not prudent until we have a full budget for the year,” he said.

The council agreed, tabling the discussion for another day.

After the work session, Finance Director Troy Woo shed light on the possible shortfall.

Expenses, mostly labor costs, might outweigh revenue, he said. If so, he thinks the city can make up the difference and balance the general fund budget without having to cut jobs or services.

“I don’t foresee staffing and service reductions,” Woo said.

But the city also is running out of one-time solutions to cover such shortfalls, and if the economy doesn’t improve going into 2016, solving a shortfall could become a greater challenge, he said.

A significant portion of revenue generated for the general fund comes from sales taxes, and sales tax revenue has been flat the past five years, Woo said. Through the first five months of this year, sales tax revenue was lower than it was for the same five-month period last year, although sales tax revenue improved in June and July, he said.

But that’s likely just seasonal improvement and not the beginning of a trend, Woo said.

He said the city felt the effects of two store closures and one business that relocated outside city limits: Top Food & Drug, which closed on Martin Way; Wholesale Sports, which closed on Marvin Road; and a Titus-Will auto dealership, which moved to the county.

Prior to the recession, sales taxes generated about $9 million toward the general fund, but it has since fallen to about $8 million, Woo said.

But it’s not all discouraging news: A Burlington Coat Factory store is set to fill the former Top Food & Drug, and the former Wholesale Sports space, which is at Lacey Marketplace on Marvin Road, is set to welcome two retailers, Lacey Community Development Director Rick Walk said.

Sports Authority, which is set to open in October, and a Petco will fill that space, Walk said.

Woo touted the need for more commercial development.

“That’s where our growth is going to come from,” he said.

For 2014, the city approved a total budget of $109 million, including a general fund budget of about $38 million.