Crunch Time

This story has been corrected to say that the council voted to create a new economic forecasting office, not a budget office. Also, the council will begin budget deliberations in October, not next month. 

Having watched the county's estimated budget deficit balloon from $25 million last November to over $70 million last month, the King County Council has finally lost faith in the ability of Ron Sims' staff to accurately predict the county's financial situation. Last week, the Council voted unanimously to create a new economic and revenue forecasting office, headed by an independent chief economist, who wouldn't be answerable solely to Sims. The move comes as the county's public safety and health departments face dramatic cuts, and half the council--as well as Sims, the Sheriff, and other county-wide positions--are up for reelection next year.

Distrust between the council and the executive has grown in recent months, as Sims' budget office repeatedly increased its estimate of how much in the hole the county's general fund will be in 2009. And the council is tired of being at the mercy of the executive's office to tell them how much cash is available. "To give one branch the full authority to come up with that number will [typically] create some conflict," says council member Bob Ferguson, D-Seattle.

Last year the council hired Seattle-based financial consultants FCS Group to interview staff and council members about the executive's budget team, headed by Bob Cowan. Most respondents said the office is slow to provide information, and that numbers, when they come, are an incomprehensible clutter of little use.

Indeed, when Seattle Weekly asked the office for a breakdown of the deficit—what went up and what went down between November and May—it took a week to get any explanation.

FCS issued a report in December that found, ironically, that council members' biggest concern is the budget office's underestimation of the amount of cash flowing in. When Sims predicts revenue, he has an interest in being conservative; overestimating the cash flow and then falling short looks bad. But the council wants the estimated amount of money available for spending to be as high as possible—all the more to dole out to their constituents.

FCS found that in the years 2003 through 2006, Sims' office consistently underestimated revenue by 6 percent. That low-balling was twice as much as in other comparably sized counties during that same period, the report said. In a year when every dollar counts, that's cash that could be used to keep a few county cops around or a public dental program running.

Trouble is, this year's been different—the original estimates were too small. 2008 was supposed to be a balanced-budget year, but instead the general fund, which supports several county departments, including criminal justice, is running $16 million in the hole, according to Cowan. Next year, he expects the deficit to be much higher. It isn't exactly confidence-inspiring.

Cowan says the rising cost of necessities like food and gas is keeping consumers from spending on the big-ticket items that bolster sales-tax revenue, and keeping developers from building new houses, which helps expand the property tax base. When the 2008 budget, along with the 2009 projection, was being put together last August, Cowan says, the housing crisis really hadn't hit the Northwest yet. "I guess we had rose-colored glasses on."

On top of that, planned annexations, which would have relieved the county of responsibility for providing services in areas that became part of cities, never happened; property-tax hikes have been held at 1 percent by the state legislature; and the county's own expenses—they have to buy gas too—keep going up. "We believe we're over $70 million [in the red for 2009] right now," he says.

It's a big deficit number, and if it's the final estimate when the council starts budget deliberations in October, everyone who's paid out of the general fund will have to make massive cuts. The Sheriff's office will have to release deputies, for example, and cold cases will remain uninvestigated (see "A Louder Rahr" in SW, July 9). The courts say any alternative judicial programs, like mental health and drug court, will have to go. The county health department runs community clinics and low-income dental and family-planning programs out of the general fund; those will be out too.

If the estimate is still short, the problem will only get worse in the years to come. And if Sims' office is overestimating, then people may be asked to cut far more than necessary. But trying to check Cowan's math is surprisingly difficult.

Council member Larry Phillips, D-Seattle, who is planning a possible run against Sims in 2009, says that's exactly the problem—the council is entirely at the mercy of the executive's office when trying to plan the budget. And in light of the current shortfall, he doesn't think Sims' staff is doing a good job of managing the money they have, but attempts to get information out of them to evaluate that haven't been fruitful. "The executive jealously guards budget info," Phillips says.

Phillips has been circulating a speech Sims gave in 2005 in which he declared "My friends, the era of deficits is over." He says that when he heard Sims say it, "I was skeptical."