Budget 2002 Reductions Summary Home | Budget 2002 Q&A | Seattle City Light Spending Reductions Overview | Seattle Public Utilities Spending Reduction Overview | Summary of Midyear 2002 General Subfund (GSF) Reductions

April 22, 2002: General Fund Budget Gap Widens

Mayor Greg Nickels announced today a package of spending reductions for 2002 that include:

› $37 million in spending reductions by Seattle City Light;
› $11.6 million in spending reductions by Seattle Public Utilities; and
› $7 million in spending reductions by General Fund-supported departments.

The mayor also extended the city's hiring freeze through the remainder of the year.

Nickels believes these reductions reflect prudent fiscal management, given current economic conditions. "Adjustments made late last year to stave off the impending fiscal crisis did not go far enough to prevent a problem for 2003," Nickels said. "These midyear 2002 savings I have announced today better prepare the city for dealing with the challenges facing our utilities, as well as a 2003 General Fund shortfall, which is expected to be at least $30 million."

Recognizing the need to bring city finances under control, earlier this year Nickels directed departments to identify savings for 2002. Nickels noted the reductions announced today do not jeopardize public safety and he will not let the city's fiscal situation get in the way of reaching his goals. "It is important to recognize even tougher decisions lie ahead. Nevertheless, getting back to basics is still my number one priority," Nickels said.

City Light is still feeling the effects of the 2000-01 energy crisis. This year, City Light will reduce operational spending by $13 million - representing an 8 percent savings - and capital spending by $24 million - representing a 19 percent savings.

City Light is freezing 104 positions now and is proposing to eliminate 66 positions as part of its 2003-2004 budget. Thirty-eight of those positions are currently filled. The utility will make every effort to redeploy people, but layoffs are likely.

"City Light is making cuts in those areas with the least impact on customers," said City Light Superintendent Gary Zarker. "Reductions will be spread throughout the utility so as not to overburden any one area. The reductions could, for example, affect the amount of time it takes the utility to restore an outage, hook up a new residence to the system or repair a streetlight. Customer service staffing in the utility's call center will not be reduced."

Seattle City Light Spending Reductions Overview

Seattle Public Utilities (SPU) faces revenue shortfalls this year and is reducing its 2002 spending by $11.6 million. These savings include freezing 50 positions, resulting in no layoffs of permanent employees. SPU's reductions are designed to protect basic services to customers, including water, sewer, drainage and garbage collection services within the city, and wholesale water service to utilities throughout King County. The utility will delay work on certain capital projects, and will reduce administrative and other operating costs.

"Our goal was to find efficiencies without significantly affecting our ability to respond to customer inquiries and service requests," said Chuck Clarke, SPU director. "We will continue to look at our budget to find additional efficiencies and to make sure we're continuing to meet basic service needs for our customers."

Seattle Public Utilities Spending Reduction Overview

In addition, departments supported by the city's General Fund will reduce spending in 2002 by $7 million. Twenty-six positions in these departments have been frozen, including five positions that will be proposed for elimination as part of the 2003-2004 budget. This will result in no layoffs in these departments, though three staff are being reassigned to other city positions.

In addition to freezing positions, the $7 million in General Fund budget reductions were generated mainly through realizing additional administrative efficiencies, foregoing or delaying one-time expenditures, and eliminating duplicated efforts. Examples of efficiencies include having fewer, smaller city vehicles; streamlining administrative processes to make faster decisions; and evaluating administrative vacancies to make sure positions need to be filled.

General Fund reductions were targeted to ensure the protection of basic services while reducing spending overall. These reductions were spread among the largest city departments. On a percentage basis, no department's reduction exceeded 3 percent of its General Fund budget and most departments contributed 2 percent reductions. Public safety departments were asked to take 0.5 percent reductions.

City Finance Director Dwight Dively emphasized that while the city faces a serious short-term budget problem, the city's long-term fiscal health is good, noting it has more than adequate reserves to meet its long-term obligations. "According to our forecasting - which assumes we will be out of the recession in 2003 - if we take steps now to legitimately fix the problem, our fiscal situation looks sustainable for 2003 and beyond," said Dively.

Nickels 2003-2004 budget will reflect further spending reductions while incorporating his overall priorities for Seattle. In mid-April, Nickels is expected to announce 2003-2004 spending guidelines to departments, based on the city's General Fund revenue forecast. These guidelines will be the first official signal of how much city departments, particularly those who receive General Fund support, may have to cut from their 2003-2004 budgets. Mayor Nickels will present his 2003-2004 budget to the City Council in late September; the Council is expected to adopt the budget by late November once it concludes its deliberations. State law requires the city budget be balanced.

Summary of Midyear 2002 General Subfund (GSF) Reductions