Fife prepares for revenue shortfalls

By Meghan Erkkinen

Fife Free Press
merkkinen@tacomaweekly.com
Published on: September 25, 2008

As the economy slows, Fife faces a considerable decline in some of its key revenue sources in 2009.

In 2008, the city saw sales tax revenues, which make up about half of its general fund, that were much weaker than expected. The Fife council and staff are bracing for more troubles ahead as they plan for next year’s budget.

When the city council took a look at revenue projections for 2009 at a recent meeting, they directed the staff to come back with more conservative estimates, calling the projections for sales tax revenues too rosy for their comfort.

“I just think we need to take a conservative approach,” said Councilmember Butch Brooks. “If we’re wrong about it,” it’s going to hurt the city, he added.

Finance Director Steve Marcotte brought a sales tax revenue estimate of $7.3 million but per the council’s request he’s looking at reducing that number by an additional $500,000. The largest amount the city has collected in sales tax revenues was in 2006, when it collected just more than $8 million.

“When things decline like that, it’s not a mathematical projection,” Marcotte said. “What is that expectation about the future? Since none of us knows what [the future] is we have to get to a consensus about our best belief.”

Fife is especially prone to revenue fluctuations because it relies so heavily on sales tax revenue, he added.

“Sales tax is one of our most volatile revenue sources,” he said. “It dries up the instant people decide to stop spending money.”

The council has begun the process of postponing projects and purchases to compensate for lower revenue projections. Councilmembers say they hope not to have to begin reducing services.

“The main thing is we want to balance the budget without raising taxes,” said Mayor Pro Tem Rob Cerqui.

While Fife will struggle over the next year, or several years, until the economy improves, Marcotte said the city is still in good shape.

“Fife continues to have a very strong business base, much stronger than most communities of this size,” he said, “and it has very good reserves. Fife is very well positioned to weather a storm for a year or two, or longer if we have to.”

Still, the council is proceeding cautiously to avoid further problems or cuts to services.

“I think it’s a matter of planning,” said Councilmember Dick Godwin. “You have to plan for the worst.”

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