It's not news to anyone that employers are still not hiring, and consumers aren't spending. In the shipping industry, this is our busiest time of year as retailers restock inventory and prepare for the holiday season. The increase is temporary however, and there are signals that we are in for another drop — whether we drop as far as last year’s historic lows is yet to be seen.
We are seeing unemployment numbers clicking up again, and we hear the warnings of a double-dip recession. The fragile economic recovery of the past six months calls for thoughtful public policy at all levels of government. Government spending should follow some simple but powerful criteria: 1. Does it help create jobs in the private sector? 2. Is it necessary and timely or can it wait for better times?
The past decade has been bad for the City of Seattle in terms of job growth. We had 30,000 fewer jobs in the year 2009 than in 2000. Of those 30,000 jobs, 21,000 were lost in the Downtown area. Areas outside of Seattle — within King County — had 15,000 more jobs in 2009 than in the year 2000.
According to a study commissioned by the Seattle Business Coalition, Seattle lost 8,900 jobs during the boom years from 2000-2008, while the rest of King County added jobs.
We in Seattle should ask ourselves how we can reverse this trend. If we’re trying to get people to live where they work, we're going to need jobs here in Seattle.
What do businesses consider when they're looking for a place to locate? They consider customer base, quality of life, costs and taxes, transportation, and other factors. Because Seattle is a great place to live we have been fortunate in being able to attract businesses. We also have a natural deep water port and a transportation system that — while a work in progress — has historically been effective at moving people and goods.
So why are we seeing job loss in Seattle and job growth in other parts of King County and how do budget and spending decisions impact this reality?
First, we know that we have a $56 million shortfall in the general fund for 2011. This fund pays for police, fire, parks, transportation, libraries, and other smaller departments like Department of Neighborhoods, Office for Civil Rights, Arts, Office for Economic Development, and others.
Although there will be a deficit in the general fund, it should be noted that the fund will actually grow for 2010 to 2011. The $908 million in GF revenue that the city projects to collect in 2011 is 45 percent greater than the revenue the city received in 2001. Adjusting for inflation, the 10-year increase is 18 percent. The city is projecting to collect more revenue in 2012 than what they project to collect in 2011.
Most individuals and businesses have actually experienced revenue decreases during the downturn. The port of Tacoma was forced to lay off a quarter of their workforce last year. Companies that survive the downturn are doing more with less.
This is a common story in all sectors of our economy. People are making decisions to position their companies to be in a competitive position when the economy heats up again. Analysts in the shipping world have long predicted that we would still be bumping along the bottom for the balance of 2010.
So, how is the city of Seattle responding?
The mayor and city council are going to hire a consultant to do a $600,000 transit study. I am amazed that there has been little questioning of this expenditure given that the city of Seattle doesn’t actually operate a transit system. But beyond that, does it make sense to spend this money at a time of budget cuts and fiscal restraint? The most we'll get is a wish list that sits on the shelf.
Any transit analysis should be paid for by Sound Transit, Metro Transit, and the Puget Sound Regional Council. The first two actually operate transit systems and the PSRC has federal pass through dollars — two thirds of which go for transit. Is this an effort to grow political support to establish a city transit system? If it is, it’s an even worse deal for taxpayers.
How many cops could be hired for $600,000? How many library hours does that represent?
There are many other ideas for how the city can live within its budget. How about consolidating information technology functions across the 22 city departments? Why does every department have to have its own IT function? Not only would this reduce staff and save money, it would also reduce the number of meetings where each department discusses how to coordinate IT help desk functions. There are currently three separate IT help desks for city departments — Seattle Public Utilities, City Light, and everyone else. Why not consolidate these functions?
Instead of giving departments a budget number and direction to make cuts to meet that number, why not try zero-based budgeting. This is precisely what the city of Bellevue is doing. Every department is being asked to build their budgets from the ground up.
Seattle should embark on the same exercise, although I suspect it's too late in the budget process to do it this go-around. Normally, the budget is mostly done by now with the mayor's senior staff and department heads making minor tweaks before sending to council. Traditionally, the council then will make minor tweaks as well.
But we have never had the zero-based budget exercise in any meaningful way. Most of the effort is spent trying to figure out how to grow revenue.
My concern is that without an honest effort to live within our means at all levels of government, the public at large will not support tax increases of any kind. And we may need to increase taxes. But without clear evidence that government is prioritizing and operating efficiently, it’s hard to ask families squeezed by the recession for more money.
And if it's all about raising revenues and not about efficiency, businesses will look for greener pastures. The evidence points to this already occurring. To be clear, fewer businesses, fewer employees, equals less revenue for government, and fewer services. That is a fact of life that some of our neighboring cities have taken to heart. We should too.
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