by Pia K. Hansen

Last year around this time, the first fight between the newly elected strong mayor and the city council was in full swing, but it was billed by everyone involved as a "learning experience." There was a new form of government to adjust to, new procedures to learn and new players, including Mayor John Powers, involved. In the fall of 2001, the city council was accusing Powers of making decisions that weren't his to make, of withholding information and budget details, and of not listening to what they had to say. On the other side was Powers, in the newly reorganized mayor's office, trying to establish that he was now in charge and that some of the tasks that fell under the city council prior to his election, now fall on his desk instead.

Apparently, nothing was learned, because this year's round of budget negotiations looks pretty much the same.

Councilman Steve Corker has suggested that the city council hire an independent budget analyst to go over the budget. He says he has lost all confidence in his ability to work with the mayor, who he finds totally unresponsive to considerations put forth by the city council.

"I'm not a happy camper about the way any of this has worked out," he says.

Councilman Steve Eugster has questioned the mayor's budget and his ability to cancel two top-level positions in the administration, letting Human Resources Director Gary Persons and Director of Management and Budget Collette Greenwood go in early October. They were quickly followed by the Finance Director Dick Cook, who resigned.

In the meantime, citizens continue to joke about the inability of the council to get along and about the mayor's inability to get anything done. Is this complete deja vu? Has anything changed?

"Some things have changed, and some have remained constant," says Powers. "To change the culture of an organization is a very long and arduous process." One of two major changes is that the council doesn't have complete control over the purse strings any longer, even though it's still the legislative body.

"Every department used to run to the council and ask for more money for this and for that, and the council found the money," says Powers, adding that sometimes the money wasn't really there. "They had lost their ability to say, 'No, we don't have the money right now.' "

That ability to say no is now being asserted by Powers, who's recommending that budgets and staff be cut across the board.

"We now have a chief elected official saying we're going to say no to that - we are going to set a new course," says Powers. "Last year's budget set a new course -- even Steve Eugster recognized that. But every year around budget time, politics will surface."

The second change is that staff at city hall has been asked to participate in the budget processes.

"We are asking them to do things differently," says the mayor. "And this is in a culture that pretty much has been status quo for a long time. We are asking them to work together on the budget, without the internal competition they were so used to."

By the Numbers -- The Mayor's 2003 budget proposal is $427 million, with a $118 million general fund (basic government services) and a $183.1 million enterprise fund (utilities), with the remainder being spent on debt service, capital projects and grant projects. If the mayor gets his way, utility rates will go up slightly, but property taxes will remain the same.

Early on in the process, City Administrator Jack Lynch decried the fact that what the administration has achieved with the new budget is being lost in rumors and innuendo surrounding personnel issues.

"The city has definitely turned a corner," says Lynch. "We have reduced our general fund expenditures from $119 million to $112 million, and we've been able to accommodate an additional $3.3 million in expenses." Those new expenses are mainly beyond the city's control, such as funding for health insurance.

Overall, the city's revenue is predicted to drop by $1.1 million in 2003, with interest earnings alone being down by $450,000. Sales tax revenues have remained steady, and there's been a $1 million increase in property tax revenue, mostly from new development, says Lynch.

Corker says he will neither support an increase in utility fees nor in property taxes. Fellow Councilman Al French is more opposed to an increase in utility fees than to one in property taxes.

"Utilities hit the low-income level in our community much harder than a property tax," says French. "And when you start using utilities to cover other expenses, that's where I have a concern."

French is alluding to Powers' desire to create an economic development office at city hall. The $227,000 allocated to this purpose would allow the city to retain Kim Pearman-Gillman -- the economic development consultant who has been on loan from Avista -- and to hire an assistant and a person to market the economic development efforts.

"We need to do this. It's our only long-term solution to improve the social and economic position of the city," says Powers. "We have gotten a good start at getting the city a spot at the economic development table, and we need to build on that."

Powers says that the increase in utility fees was planned long before the budget process started, so where does the idea come from that he is raising the fees to fund this office?

"Bluntly stated, it comes from council members who don't like the idea of having this office," says Powers.

Corker is opposed to the development of an office for economic development. The cost of creating the office will take about one-quarter of one percent out of the general fund, but even as little as that, French agrees, may be too much.

"When you are in a tight spot financially, every little bit counts," French says.

The Reserve Fund -- The mayor continues to pursue the establishment of a reserve fund, and he has allocated $3.2 million for this purpose. The establishment of this fund was the center of a huge debate last year -- a debate that continues today.

"Last year we compromised on $2.1 million, so if this goes through, we'll be at $5.3 million or a little over 4 percent of the general fund," says Powers. "I'd like to see us have $8 million or about 6 percent set aside by 2004."

But can the city really afford to put aside money in a reserve right now, with the economy in a slump?

"It's easier to do it this year than next, and it shows financial responsibility," says Powers. Even if the city reaches the $8 million mark, that's still on the lower end of what bond rating agencies recommend, but it would allow the city to pay its bills for 23 days, he says.

Corker says he will not support the restricted reserve account. He'd prefer to see the $3.2 million spread out on the Police Department ($1 million) the street fund ($1 million) and the remainder being set aside for meeting the results of the mediation and binding arbitration currently going on with the city's employees.

Councilman Al French is a little softer on his stand. "Having a reserve is a good idea, but the question is how much can you defer from the primary needs you must fill," he says. "I think the mayor is asking for too much. A starting point for me would be $2 million."

Public Safety -- The police and fire departments have budgets that represent more than half of the city's general fund spending; both faced tough budget choices. For 2003, the SPD's budget will be $5 million higher than it was in January of 2001, claiming almost 32 percent of the general fund budget compared to 28.5 percent in 1997.

"Public safety is still an absolute top priority, but yes, there will be some layoffs -- mostly in the form of [Police Chief Roger Bragdon] being unable to fill vacant positions," says Powers. "The chief can still look me in the eye and say that he can get the job done with this budget. We'll have the same number of officers on the street in January of 2003 as we had this year."

Actually, what Bragdon is saying is that he can keep things the way they are.

"We can maintain the current level of protection for the community with this budget," says SPD spokesman Dick Cottam. "We haven't fired anybody, and we haven't laid anybody off. But we do have eight positions on the shelf, from which people retired, and they are still on the shelf." Over the past year, the SPD has refrained from filling 10 vacant staff positions in records and dispatch.

Some of the school resource officers that were lost in the last round of budget cuts have now been funded by a grant.

"Six of those eight positions will be funded for five years, not by this budget, but by a separate grant -- it's important not to mix that up," says Cottam. "Current officers will be moved into those positions -- we hope it's the ones that used to work as school resource officers. And six new people will be hired to fill those openings."

Staff Reductions -- The mayor, who's often criticized for having too large a staff in his own office, is presenting a budget in which layoffs and staff reduction at city hall would cost at least 50 temporary and seasonal positions.

"Yes, that has come at a cost of some tension with the employees," says Powers. City employees may also end up having to pay an extra premium to cover their dependents under the city's health insurance plan.

"We spend about $15 million a year on health insurance," says Powers, "and we are looking at an increase of 10 percent, so that could easily happen."

On the employment side, many aspects that could have huge impacts on the city's financial future are still up in the air. Currently, the city is negotiating with Local 270, the Management and Professional organization, the Police Guild (which has entered into binding arbitration with the city) and with fire fighters.

French says it's a fact that there isn't enough money to go around, but he'd rather not point to specific departments where more cuts could be made. "We could cut back more -- I think there's some more streamlining to be done," says French.

Common Ground -- There seems to be a fundamental difference in how Powers and city council President Rob Higgins want to run the city's business.

"I say we have to run the city as a business, with the same kind of fiscal responsibility that the private sector has," says Powers. "But Higgins, and I say this with all respect, says it's government and that our number one priority is to provide services. I say our number one priority is to be so fiscally responsible that we are able to provide those services."

Higgins was out of town as this story went to press and could not be reached for comment.

French says that the process still is a learning experience. "We are trying to find consensus around issues that we have four or five votes on," he says, "and to find out what issues are just issues for individual council members."

French says he was hoping for the budget process to get started earlier, because making tough decisions under a short deadline just makes it harder for everyone.

"We need to respond to the mayor before the first of December, then he has a 10-day window to exercise his veto, which by then could take us all the way to the holiday season," says French. "Around the holidays, it may be hard for us to have a quorum, but according to the charter we have to have the budget ready by

Jan. 1."

Mayor Powers says he's looking to find some common ground with the city council.

"But where you don't find common ground, you have to stand on your own ground," he says. "Overall, I think we are responding to the council's criticisms and concerns. It will work out. Remember, it was actually one of the things that worked out last year."

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