Bellevue is facing a $25 million deficit over the seven-year life of its Capital Improvement Plan, but cost-cutting measures have kept the city’s two-year budget in balance, officials said.
The council and staff began the discussion of the deficit, which was caused by decreases in many of the major tax revenue sources, during a quarterly financial review Monday.
The deficit balloons up to $35 million if the failed local improvement district for road projects is accounted for, but city leaders have said the projects are being reduced to the point where that won’t play a big role.
Of course, all of this could change if the economy comes back quicker than expected. Predicting something several years in advance is an inexact science, council members said.
“I would imagine that following 2001, when we were hit by both the dotcom bust and the airline bust that came out of it; if anyone told us in 2008 we’d have 20 cranes in the air, we’d think they were crazy,” said Councilmember John Chelminiak.
Sales tax and the business and occupation tax both were down, with the B&O diving nearly 25 percent from this time last year. Both funding sources have shone an uptick in recent months, and sales tax has grown at about the same level as inflation this year.
On the general tax fund side, revenue is down as well, approximately $3 million short of the projected budget.
But Bellevue officials say the city has recourse to deal with these problems. Staff and the council can work out a long-term solution, as financials are not in immediate peril in terms of the current budget. The city has a $25 million contingency fund that could be used to pay it off, or a number of projects could be trimmed back. Staff also could borrow from a $30 million line of credit established in 2009. It comes down to a policy decision.
Council members saw a solution to this problem in terms of economic development. The key to fixing the financial problems is to attract good businesses to up the B&O taxes, and convince people to spend their hard-earned cash at Bellevue Square and other local outlets.
“We have so many great assets in the city of Bellevue, bragging about them a little bit couldn’t hurt,” said Councilmember Kevin Wallace.
Several members suggested forming an economic development committee of proven builders in the community to advise on these issues, but the time crunch created by the East Link negotiations will put that on hold, said City Manager Steve Sarkozy.
The council began a discussion with staff about how the shortfall will affect the East Link project. Things remain conceptual at this level, as staff is still formulating the possible costs associated with putting up $160 million in cost reductions and other contributions toward a downtown light-rail tunnel.
Nat Levy can be reached at 425-453-4290.
