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City faces decline in real estate taxes

By John Larson

The city of Tacoma may hold off on some capital projects because of a sharp decline in real estate tax revenue. Tacoma City Council was briefed on the topic during its April 29 study session.

Finance Director Bob Biles told them this stream of revenue began dropping in October and the city may only collect half of what it projected for 2008.

The amount dropped from $741,000 in September to $534,000 in October. City staff originally expected to collect $10 million this year, but under current market conditions now expect to collect about $5 million.

City Manager Eric Anderson said some capital projects may have to be put on hold because of the decline in revenue, although he did not make recommendations about any specific projects. These could include street repairs, fire stations, construction on the Chinese Reconciliation Park and renovations to Cheney Stadium and the County/City Building. “We are probably not going to move forward with several items,” he said.

Anderson and the council will begin discussions on the 2009-10 budget in June. He is expected to present a preliminary budget in October, with the council adopting the final version in December.

“It is not a rosy picture,” Anderson said of current conditions. “If we are correct in being conservative, we will have to hold the line on the budget. I am concerned about the volatility of the economy.”

The city is in better shape financially than Pierce County, where department heads have been ordered to make budget cuts.

Anderson cautioned that the city could find itself in a similar situation as the county, but expressed optimism Tacoma would finish 2008 within budget.

Other economic data presented to the council shows employment projects are strong. Employment is projected to increase 1.5 percent next year, while personal income is expected to go up 5.9 percent.

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