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Budget challenges ahead for Wake Co., Raleigh

Posted November 14, 2008

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— Sales tax revenues for Raleigh have failed to reach the projected 5 percent increase forecast for this year, and the troubled economy is to blame.

City Manager Russell Allen said Friday that revenue from sales tax makes up about 20 percent of the city's budget.

The shortfall means many city departments are in a hiring freeze, and some city maintenance projects are on hold.

"We've tried to position ourselves to conservatively expect to receive less than what we budgeted," Allen said.

So far this fiscal year, revenue has grown 1.73 percent, as of September – a significant difference over previous years when revenue estimates are typically more than 7 percent. Last year at this time, even as the economy began to slow, revenues grew 4.84 percent.

Wake County has similar problems with its budget. The projected shortfall for the year is nearly $17 million, mostly from a slowing property tax base.

Assistant County Manager Joe Durham said all departments are being asked to cut from their budget.

"We are looking at a hiring freeze, reducing travel and looking at department-reducing expenditures for the remainder of the year," Durham said.

North Carolina State University economist Mike Walden said that as local governments continue to look for ways to cut back, the situation will likely get worse before it gets better.

"We're in the middle – at best – of this recession. We've got another six months to go," he said. "Most governments will say, 'We really can't raise taxes, we have to cut services.' The question is: 'How do you do that?'"

For both Wake County and Raleigh, layoffs are not an option at this point.

Allen said the hiring freeze has saved about $1 million. The city also budgeted for gas to be higher than what it is now, so they are hoping to save money in that area as well.

"I think it may impact us in next year's budget if we don't see a pick-up in the economy," he said. "Then, we'll have less revenues to work with next year."

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  • chfdcpt Nov 14, 2008

    And the problem will continue because we sheep keep re-electing them.

  • whatelseisnew Nov 14, 2008

    inform - I agree - the State frittered away every surplus they have had in recent years and kept adding programs. Wake County should have banked the extra money they got from the reassessment. But these politicians love to spend every dime and then borrow more. The sad part is that so many people have no problem with the spending and no problem with taxes being piled on. Witness the foolish decision recently to hand over 70 million to the school board right at the moment they were going to halt some projects and actually look for alternatives. A stupid decision.

  • inform Nov 14, 2008

    whatelseisnew - this should have been governments response during boom times, so that spending could increase during downturns and provide a bouy. Classic Keynsian economics, and the reason why increased spending won't help now, because government at all levels has failed to limit itself. We're looking at only the tip of the iceberg at the federal level.

  • whatelseisnew Nov 14, 2008

    It is very simple. You do more for less. Need some lessons, talk to the private sector. Next step is you start cutting and eliminating all but critical services. Next you tell the Wake County School Board to expect a large cut in funding next fiscal year. Mike Walden thinks this is only another 6 months? I do hope he is correct, but the reality is we are only just starting the downturn. It has much further to go. So either they really get serious and cut big time now or they will find themselves way under water in a few months. Expect another upswing in home foreclosure activity soon.