• GOLDY
• Seattle Mayor Mike McGinn and Budget Director Beth Goldberg deliver the bad news.

Facing slow post-recession revenue growth, cuts in state and federal grants, and rising pension, health care, and deferred maintenance obligations, Seattle Mayor Mike McGinn has instructed department heads to come up with proposals for an additional 3 to 8 percent in cuts for the 2012 budget. McGinn is also initiating a feasibility study to evaluate consolidating five smaller departments: Neighborhoods, Housing, Economic Development, Arts & Cultural Affairs, and the Office of Sustainability & Environment.

Police, Fire and Human Services, which together account for more than half of General Fund spending, have been asked to reduce their budgets by 3 to 6 percent, while all other General Fund dependent departments have been instructed to cut 4 to 8 percent. The goal is to achieve cost savings of between $25 million and $45 million.

Sitting in front of a projection illustrating unusually slow tax revenue growth in the post-Great Recession period—projected at only 3.4 percent annually through 2014, compared to rates more than twice that following previous economic downturns—McGinn and City Budget Director Beth Goldberg didn't sugar-coat the challenge. "The easy cuts have already been taken," Goldberg offered, referring to the prior three consecutive years of budget reductions, prompting McGinn to quickly add, "We've taken cuts that weren't easy too." The proposed cuts will largely be shaped by the department heads, and delivered to the Mayor in June. McGinn will submit his proposed 2012 budget to the Council on September 26.

With the details of the looming cuts at this point so nonspecific, the proposal to consolidate five popular departments will likely prove the most controversial, with effected constituencies rising to their defense, but McGinn emphasized that there was "no predetermined outcome" of the study, and that goal was merely to achieve economies of scale while leaving the departments' programs substantially intact. "If we keep whittling away at these smaller departments, their ability to deliver services becomes limited," McGinn warned, insisting that these five departments would be responsible for cutting costs by 4 to 8 percent regardless, with or without consolidation.

So how does 3.4 percent annual tax revenue growth turn into a 3 to 8 percent budget cut? Local taxes are only part of the revenue picture, and the city anticipates substantial cuts in state and federal funding as both those entities attempt to address their own budget crises. On the spending side, costs like health care and fuel continue to rise, while city budget writers face serious questions about whether we can continue to underfund pension obligations and deferred maintenance. "Pay now, or pay more later," McGinn succinctly put it.

Pension funding has become a hot-button issue throughout the nation, as years or even decades of underfunding has left scores of municipalities on the verge of insolvency, unable to meet their obligations. Seattle is nowhere near that level of crisis, Goldberg assures me, although she says its pension funds did lose a "big chunk" of their assets in the financial market collapse. Last year's audit showed that city pensions remained underfunded, but with Wall Street continuing to recover over the past year, that situation has surely improved. A new audit will be completed in June.

If there was good news from today's press conference it is that while things are still getting worse, their not worsening any faster. "After two years of downward spiral in revenue, we're finally seeing stability," Goldberg offered. But that doesn't mean we'll return to pre-recession revenue levels anytime soon, if at all.

No doubt Seattle's budgetary problems pale in comparison to the state, or other big cities—for example, Philadelphia faces a $600 million shortfall in its school district alone—but at some point Seattle is going to have to engage in a more serious conversation about how we envision our future, and whether we're willing to tax ourselves enough to pay for it. It's a conversation McGinn only hinted at today, but one that can't be avoided without guaranteeing an endless series of annual budget cuts.