Mike McGinn Says Gloomy City Budget Will Get Even Worse If Popular Tax Initiatives Pass

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After a backlash over his initial plan to fire 200 city employees to help balance the city's ailing budget, Mike McGinn now avoids any specifics in talking about how he'll balance the 2011 budget. But he's running out of time; his initial proposal is due Sept. 27.

As that early plan for mass firings shows, McGinn always knew he would have to make deep cuts. But now it turns out those cuts will have to go even further than he initially expected. McGinn says that thanks to a still-sluggish national economy and two initiatives that look to have a good chance of passing on the November ballot, that city's 2011 shortfall will be even bigger.

Last week the U.S. Commerce Department announced that the national economy is recovering far more slowly than expected. "That affects us here," McGinn told reporters today.

Until now, city economists had been projecting a $56 million shortfall in 2011. But they are working on revising that number in light of the still-struggling economy, McGinn said.

He did not have a number for how much higher the new projected deficit will be. But it isn't the only thing that will negatively impact the city's financial picture. Two initiatives on the November ballot--one to privatize liquor sales and another to repeal the soda, beer and bottled water tax passed by the state legislature this year--could cost the city as much as $3.2 million next year, according to city Finance Director Beth Goldberg.

On Monday, Survey USA released the results of a 3-day poll of 1,000 likely voters paid for by King 5. An initiative to end the so-called "sin" taxes had support from 42 percent of the respondents. Only 34 percent said they would vote against the tax and everyone else said they were undecided.

In a similar poll conducted two weeks earlier, Survey USA found over 50 percent support for both of the initiatives to privatize liquor sales in the state. The stores, which are currently state-run, send a portion of their revenues to the cities where they operate.

Since those initiatives won't be voted on until November, the city may find itself scrambling at the last minute to close a deficit that has suddenly ballooned over $60 million.

 
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