Bellevue facing midyear budget woes

Because of a sputtering economic recovery, Bellevue is facing a midyear budget shortfall that could lead to layoffs, city officials have told employees.

City Manager Steve Sarkozy and his deputy, Brad Miyake, delivered the bad news in emails to employees Friday and to the City Council Monday, saying sales taxes were continuing to fall and business and occupation taxes haven't recovered as expected.

The officials told staff they have instructed department heads "to take a timeout on any new hiring" until new jobs are approved by the city manager's office.

"As you know, we made every effort to minimize impacts on staff in the last budget process. We'll make the same effort this time around, but layoffs may also need to be part of the conversation," they wrote in an email signed "Steve and Brad."

They have asked departments to submit ideas on how to cut spending and raise more money.

"We're trying to walk the fence here, not doing too much damage to the operation but still bring in balanced budgets with healthy reserves. We have an issue here, but it's far less than what we grappled with in the fall," Sarkozy said in an interview Monday.

If the administration can't find efficiencies to fully close the funding gap, he said, it will ask the City Council to set priorities before services are cut.

The city projects a $6 million shortfall — about 2.2 percent — in the $272 million 2011-12 general fund.

The City Council in December adopted a biennial budget that eliminated 49 jobs, limited public restroom hours and reduced weekend hours of community centers to close what at the time was a $16 million funding gap. The council also trimmed its seven-year capital budget by $100 million and raised utility rates.

Keith Ervin: 206-464-2105 or kervin@seattletimes.com