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Renton Prepares for Impacts from National Economic Slowdown

August 7, 2008

For more information contact:
Preeti Shridhar, Communications Director 425-430-6569

RENTON:  As the nation’s economy faces a downturn stemming from the mortgage crisis, high fuel costs, large declines in revenues and increased fixed costs, the City of Renton is closely watching these trends and preparing to deal with future uncertainties and potential budget shortfalls. King County, Seattle and other neighboring cities have indicated significant revenue shortfalls and budget reductions.

“Unfortunately Renton is not immune to these factors and we are experiencing similar trends here,” said Iwen Wang, Administrator, Finance and Information Services. “Our revenues for the first half of 2008 are below budget projections and our forecasts show this pattern to continue into 2009. We expect a further decline in new residential building permits resulting in reduced revenue from real estate excise tax and building permit fees. Sales tax revenue is also expected to fall short of expectations for the remainder of this year and likely to remain soft in the near future. ”

These trends are being monitored closely as the city begins planning for the 2009 budget cycle. The city is committed to ensuring fiscal responsibility while maintaining the city’s services.

“I have asked the city’s administrators to restrict most staff hiring, including positions previously approved in the budget,” said Mayor Denis Law. “In addition, department administrators are being fiscally conservative and carefully scrutinizing all non-essential expenditures while focusing on maintaining core services. Wise decisions and responsible fiscal policies will get us through these times in the best possible financial position and will help us plan for the 2009 budget.”

The city’s major revenue sources are primarily property and sales taxes.  As the real estate market turns downward, the city anticipates a slower growth in new construction and property tax revenue. Additionally, state law limits the ability for cities to raise property tax on existing properties to 1% per year.  Despite the remarkable growth in new businesses and a diversification of the tax base in Renton, the growth rate of sales tax revenue is on the decline. At the same time, increasing fuel costs and other inflation cause city expenses to rise faster than its revenues. A large part of the city budget includes salaries and other expenses for employees, who are responsible for providing basic city services such as police, fire and emergency services, street repair, parks and recreation, customer service and more.  With the current economic condition, costs are expected to increase by nearly 6% next year.

Despite the economic downturn across the nation and in parts of our region, several developments continue to boost Renton’s economy. Recently the Seattle Seahawks moved to their new home in Kennydale. New stores are opening at The Landing and new businesses and residential development are thriving in downtown Renton. City officials continue to have discussions with prospective developers and new employers who are interested in Renton as a potential area for relocation.

“Make no mistake about this-we have a very well-run city,” said Law. “Smart investments have helped us, and many great things are happening in Renton. Our prudence during the boom years will help us weather the uncertain times ahead, and we will continue to provide high quality services, programs and infrastructure.”