The just under 1,000 employees remaining at the city of Vancouver, which has been hammered with successive layoffs the past several years, can breathe a sigh of relief: No layoffs are expected in the next biennial budget.
Revenue is flat in the city’s 2013-2014 budget, but that’s a good thing when compared with the millions in losses over the last few years, city budget planners said Monday.
But it’s not time to get complacent, they warned: The next two years are expected to be a brief respite before expenses once again outpace tax revenue and other money coming in — unless leaders can make some big changes.
“We’ll use this relative fiscal stability to examine our business model without the fear of when the next round of layoffs are coming,” City Manager Eric Holmes said, adding that in 2015, the city is once again expecting to face $2 million to $3 million budget shortfalls annually.
A preliminary glance at Holmes’ budget shows no new revenue (save a 1 percent annual increase in property taxes), and no major cuts.
However, 15 public safety positions funded by grants — including the 13 spots paid for by a federal award that helped Vancouver reopen shuttered Fire Station 6 — won’t be kept up, or other departments will have to be slashed to keep them.
The city council spent more than five hours Monday discussing the budget, set for release in October, with policy tweaks by the city council in the meantime.
In the interim, Vancouver is planning on asking voters to approve a property tax increase for parks funding (although if approved by a simple majority, the first of that money would not be paid out until 2014). The city manager’s budget does not assume that revenue will be available.
Also in the works is a new redeployment method for fire and emergency services that could create savings. Another study is looking at an overhaul of the way Vancouver pays its employees,
including possible pay for performance and a comparison of salaries and benefits with the private sector.
City budget staff delved into the $272.9 million biennial general fund, the pot of money that funds public safety, parks and recreation, and road maintenance.
Overall, tax revenue between 2013 and 2018 is expected to grow at a rate of 1.5 percent to 2.4 percent, Budget Planning Manager Natasha Ramras said.
“What we have been seeing is somewhat of a flattening of tax rates,” she said.
Auto sales and new construction, for example, are expected to go up slightly and bolster sales tax. However, telephone and cable taxes are projected to slide as people ditch land lines and Comcast in increasing numbers.
Next year, Vancouver will also hit its statutory cap of $3.325 per $1,000 of assessed value in property taxes. Assessed home values have a directly inverse impact on property tax millage rates, Ramras said. So as values decrease, as they are expected to until at least 2015, it has the side effect of driving up the millage rate to the cap.
Once that happens, Vancouver will lose $500,000 to $1.4 million a year, until home values go back up and the millage rate goes down, she explained.
At the same time, Vancouver’s salary and benefits costs are expected to rise between 3 and 4 percent in 2013 and 2014. About 70 percent of the general fund goes to employee costs.
Thus, without solutions by 2015, layoffs and service cuts are expected to resume, Holmes said.
Vancouver’s structural deficit — with costs outpacing income — has existed for more than a decade, but remained largely masked by economic good times. But as the recession hit, so did layoffs and service reductions.
Prior cuts included eliminating 57 positions and freezing 24 vacant jobs to fill a $15.5 million hole in 2009; 66 positions and $6 million cut in 2010; and most recently, the loss of 17 parks and recreation staff members this spring.
“This budget, it’s fairly stable,” Holmes said. “I don’t think it is the same as (in 2010), because we don’t have such dramatic changes that we’re anticipating.”