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City of Seattle
Gregory J. Nickels, Mayor
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NEWS ADVISORY
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| SUBJECT: Mayor Greg Nickels Orders Immediate Hiring Freeze as City of Seattle Faces Worsening Revenue Forecast
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FOR IMMEDIATE RELEASE:
8/15/2003 3:00:00 PM |
FOR MORE INFORMATION CONTACT:
Office of the Mayor (206) 684-4000
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Mayor Greg Nickels Orders Immediate Hiring Freeze as
City of Seattle Faces Worsening Revenue Forecast
SEATTLE — In the face of worsening revenue forecasts for 2003 and 2004,
Mayor Greg Nickels today ordered an immediate hiring freeze, put restrictions on
travel by city employees and told all departments to spend less than their
authorized budget levels for this year. The city’s latest General Fund
forecast shows an additional shortfall of about $23 million for the two-year
period. This amount is in addition to a $15 million shortfall projected in
April.
"These are tough times and they require making tough choices. We will
continue to protect basic services as much as possible and make city government
live within its means," said Mayor Nickels.
Since the April forecast, the city of Seattle’s problem has worsened. For
2003, the projected revenue shortfall has nearly tripled from $5 million in
April to about $14 million. For 2004, the projected shortfall has more than
doubled from $10 to $24 million. The 2003 Adopted budget is $638,723,000 and the
2004 Endorsed budget is $661,271,000.
There are three main reasons for the shortfall: for the ninth consecutive
quarter there continues to be a downturn in retail sales tax revenue, another
falloff in telecommunications tax revenues, and lower than expected revenue from
parking tickets.
Most of these shortfalls reflect continuing weakness in the Puget Sound area’s
economy. Employment levels are lower than predicted last fall. The war in Iraq
hurt tourism in the spring, leading to lower hotel occupancies and tax revenues.
"This is not just a problem for Seattle. The economy in the Puget Sound
region continues to bedevil forecasters throughout the region," says City
Finance Director Dwight Dively.
Nickels had expected more expenditure cuts or revenue increases would be
necessary for next year’s budget, but had not expected a shortfall of this
magnitude. He has begun discussions to determine where cuts will be made.
The Mayor will present his 2004 budget proposal to the City Council on
September 29. The Council is required to adopt a budget by
December 1.
Earlier this year, the Mayor ordered a 1.5-percent reduction in 2003 spending
by the city’s larger departments, except the Human Services, Police and Fire
Departments. These cuts already have been implemented and help offset some of
the projected revenue shortfalls. At the same time Mayor Nickels called for
Seattle City Light to cut spending by 6 percent to address the utility’s own
revenue shortfalls. City Light and Seattle Public Utilities are not funded by
the General Fund.
Dively emphasized the city’s long-term fiscal health is good, noting it
continues to maintain significant reserves to meet its long-term obligations.
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Mayor's Office
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