Schell wants to plug budget holes with reserve fund

Mayor Paul Schell submitted his final budget to the Seattle City Council yesterday, a plan that would avoid major cuts by using a windfall from the invalidation of tax-cutting Initiative 722 to make up for tax revenues slowed by a slumping economy.

Last year, Schell and the City Council agreed to set aside $16.3 million over the next two years to be spent only if Tim Eyman's property tax-limiting initiative were overturned.

While the state Supreme Court obliged last week, the economy has upset earlier budget assumptions, and Schell yesterday proposed using the money to plug holes in his proposed $654 million general-fund budget for 2002.

However, the economy isn't the only thing that has changed. With Schell losing in the primary election last week, his clout has diminished in the eyes of some council members.

City Councilman Jim Compton said the city is "in effect, between mayors" and it is time for the City Council to "reassert our authority" in the budget-writing process.

Compton was irked by Schell's budget plan, which ignored the council's earlier plan to spend about $6.5 million of the I-722 money in four areas: transitional housing, homeless shelters, sidewalks and roads maintenance.

"Those were not in there by accident. They were important priorities for the council," Compton said. "For them (the Mayor's Office) to simply confiscate the money without any consultation with the council — it's maddening."

Schell's budget, which is a revised version of the 2001-02 budget adopted by the city last year, assumes that Eyman's latest tax-cutting effort, Initiative 747, will not pass in November. If it does, the city may have to trim an additional $8 million next year.

The budget also assumes that voters will reauthorize the Medic One levy, which provides $16 million for the Fire Department's emergency medical services.

City tax-revenue collections are down $6.7 million this year from a forecast in November. And revenues for next year are expected to be off by $8.5 million, according to the city budget office. Most of that is because of slumping sales and business-and-occupation tax collections, offset somewhat by rising utility-tax revenues. Those projections do not take into account the full impact of looming Boeing layoffs or the Sept. 11 terrorist attacks.

Earlier this month, Schell announced a citywide hiring freeze and ordered city departments to trim $3 million by the end of the year. Still, Schell found room in his proposal for $1 million in program "enhancements," which may become targets as the City Council weighs in.

City Councilwoman Judy Nicastro pointed to two items that Schell added to the budget, despite the economic downturn: $250,000 to retrofit the city's diesel-powered vehicles with pollution-reducing devices, and $75,000 to give city employees access to FlexCar, a car-sharing program.

"I see those as luxury items," Nicastro said.

Other additions Schell proposed yesterday included $500,000 to repay the Muckleshoot Tribe for ceding its claim to land at the former Sand Point Naval Base and $40,000 for the city's 150th anniversary celebration.

In his budget address to the City Council, Schell echoed the themes of his failed re-election campaign. He listed major accomplishments of his term, such as the construction of new libraries, community centers and more money for homeless shelters and road repair.

And Schell, who got a standing ovation from city employees, said the city must maintain those commitments to "guide our city through the shadows as surely as they have in the sunshine."

Jim Brunner can be reached at 206-515-5628 or jbrunner@seattletimes.com.