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Council demands 11th-hour budget cuts

But the finance director lambasts the council for four years of ‘mismanagement.’

For nearly 11 hours Wednesday, City Hall was filled with the sounds of deconstruction.

First, City Councilors cut $2.5 million from the operating budget. Then they started slicing – and eventually restoring – items on the capital projects list.

But there was no restoring that first $2.5 million, the absence of which will lead to 10 percent cutbacks in all city departments, likely staff cuts and a reduction in basic services, according to Finance Director Elray Konkel.

“I basically have seven people saying ‘we failed – you fix it,’” Konkel said of the City Council, which voted 5-2 in favor of the cutbacks. “These people are just admitting to the world that they have mismanaged this place for the last four years. It’s a knee-jerk reaction.”

Councilors said the cuts are needed to reduce spending that has grown disproportionately large compared to other cities, as noted in the recent benchmarking study.

Staff said the draft operating budget increase for 2008 was capped at 5.8 percent – for about $27.5 million total – at the earlier direction of councilors, who changed course Wednesday in ordering the reductions. After cuts ordered by the council, city operating spending will be about $25 million in 2008, down from $26 million this year.

Cuts were recommended in the benchmarking study, but the pacing and sequence in which those cuts should take place has been debated. City staff members said slashes shouldn’t be made until the other recommendations of the study are also put into effect.

“This is a complete left turn,” City Administrator Mary Jo Briggs told the council. “We have spent six months doing the budget according to your guidelines. This will have a significant impact on basic services.”

Councilman Bob Scales said the change is needed now, to reel in spending before things get worse.

“We can’t do what we originally thought we could do,” Scales said. “We’re on a trajectory that we can’t maintain.”

Councilman Nezam Tooloee, who has continually pushed to reduce operating costs, introduced the motion to do so Wednesday.

“I think this is perfectly reasonable,” Tooloee said, after expressing dismay at a 50 percent increase in operating expenses since 2004. “Where I live, 50 percent is just crazy. You can’t do it.”

Responded Konkel: “Of course, he approved all those budgets.”

Other council members agreed with the administration that the service cuts will be too drastic.

“I think we are basically headed for trouble,” said Council Chair Chris Snow. “I’m willing to tighten a notch or two, but I’m not willing to go down to nothing.”

Snow and Kjell Stoknes voted against the cutbacks.

Konkel said city staff now are scrambling to adjust the budget before its final approval by the council next week. Finance staff met with all department heads Thursday to discuss the impact of the reductions.

“There are so many things in our operating budget that cannot be cut,” Konkel said, citing insurance and utilities among the city’s mandatory expenses. Because of the short timeline, uniform cuts across all departments are the only solution, he said.

Both councilors and staff had expressed some trepidation about this year’s budget process, which traded the multiple all-day budget meetings of years past for shorter workshops and Wednesday’s marathon session.

“This would be easier if we had more time,” Konkel said. “We still would have had the same constraints, but we would have had more time to react.”

Along with potential staff reductions, the cuts likely will hamper training for new employees.

“It’s just insane to have 40 new employees and not be able to send them to classes,” Konkel said.

The capital budget also saw changes Wednesday.

Councilors trimmed projects until all debt had been eliminated, and then reinserted only the projects they believed warranted going into debt.

Included on the list are the Winslow Way Streetscape, Quay Bainbridge Apartments purchase, Wyatt Way roundabout, a new Senior Center, soccer fields at Battle Point Park and a new police and court facility.

A number of road, non-motorized and future open space projects were left out.

Funding for annual road maintenance – in the amount of $800,000 – was cut completely from the budget.

By the end of the day, budgeted debt for 2008 had been reduced from $9 million to just under $4 million.

“What we have all done here today I think is quite remarkable,” said Scales, who also acknowledged the burden placed on staff by the cuts.

“We’re taking it as a challenge,” Konkel said. “We will rise to the challenge and we will produce a budget minus the $2.5 million.”

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