Budget Information for 2011-2012 Biennial
Why is there a shortfall? Our taxes do not keep up with the rate of inflation and population growth. This means there is continual erosion in the purchasing power of our taxes relative to our increasing costs and demands for service. Between 2005 and 2009 inflation has increased costs by 12.9%, population has grown by 8% and actual tax revenues have grown only by 5.5%. The erosion in tax revenues relative to increasing costs and demands amounts to a difference of nearly $5 million at the end of 2009. See tax erosion chart.
With the completion of the Good Samaritan project, sales taxes are expected to decrease by another $1.4 million in 2011. This amount combined with the erosion described earlier could have produced a shortfall of tax revenues of about $6.4 million. With revenues in 2010 expected to be nearly $5 million less than the adjusted budget we appear to be on track to nearly match the shortfall for this year--spending nearly $5 million less than the adjusted budget.
What have we done so far: City departments have all been working together to systematically reduce costs and expenditures, while trying to minimize impacts on the delivery of city services. For example, there are 12 vacant positions in the governmental funds that remain unfilled and will be eliminated; street maintenance and capital purchases of vehicles and equipment have been deferred; parks department seasonal workers have been reduced and library purchases have been curtailed. Because of these actions and city staff's diligence in saving where we can, the city has been able to avert major service reductions up to now. However, we know that some of these adjustments can not be continued indefinitely, and our cost of doing business continues to increase. Though the elimination of 12 positions produces a savings of nearly $1 million per year, we still have to cover a shortfall of almost $5 million per year in 2011-2012.
What more can we do? We are looking for permanent adjustments in our operations to bring the city budget back to a balance where regular on-going expenditures are equal to or less than our regular on-going revenues. That's why it is very important that Puyallup citizens give their input on the preferred way to do this. If you have questions or concerns you may call the city Finance Department at (253) 841-5478. Thank you again for your participation.
Budget Graphs and Charts
Adjusted Budget: In 2010 the city reduced its budget by $7.8 million dollars. This was the amount paid to Central Pierce Fire District in 2009 for fire protection services. As a result, the City Council decided to return the savings ($7.8 million) back to the taxpayers through lower property and utility taxes.