Hanford layoffs: Tightening purse strings

By John Trumbo and Jacques Von Lunen, Herald staff writersOctober 20, 2011 

-- Editor's note: Hanford started this year with 12,000 workers and nine months later about 2,000 positions have been cut. Herald reporters and photographers take a closer look at what this means to Tri-Citians and our economy with a daily series of stories that began Sunday.

While the Hanford layoffs are hard on those who have lost their jobs, Tri-City public agencies say they are well positioned to ride out the economic roller coaster.

No layoffs, service cuts or significant interruptions of planned projects are expected, so far, said city, county and port officials interviewed by the Herald.

But they are closely watching the economy and their spending.

Most were generally hopeful for the near future despite the end of a $1.96 billion stimulus package that temporarily boosted nuclear cleanup jobs at Hanford.

Tough economic conditions in the state and nation helped local governments stay conservative in their budgeting for this year and next.

"Yes, there will be an impact," said Benton County's administrator, David Sparks. But it won't be a hard hit, he said.

Benton, Franklin counties

Benton County's 2011-12 budget was put together without depending on the stimulus money but they could face cuts the following year if Hanford work continues to slow and people stop spending.

"It depends on how much our sales tax is hurt," Sparks said.

"Half of our sales tax comes from Hanford. We have to find out how much of the reduction in stimulus money is in people and how much is in projects. It makes a difference," Sparks said.

Franklin County officials still are putting together next year's budget. They may keep working on the numbers until the last minute to watch the most-recent sales tax trends, said County Commissioner Rick Miller.

"If we have less revenue, we may have to do some changes in the budget," he said.

Sales tax receipts through September closely mirror those from last year, said Commissioner Brad Peck. So, for now, they won't have to cut services or jobs.

Richland

Mayor John Fox said he believes the Hanford layoffs will have a negligible effect on city services in Richland, and a dip in sales taxes shouldn't harm the city.

"Our general fund is more dependent on property tax and utility taxes," Fox said.

Richland City Manager Cindy Johnson said the city has been very conservative in budgeting and will do a "continuous review" on how the Hanford cutbacks affect the city.

"The council will ask staff to track sales and utility taxes carefully in the last quarter of 2011 and first quarter next year, also watching building permits, to see if a trend is emerging that would require a review of our budget," Fox said.

City Finance Manager Dan Underwood said he prepared the 2012 budget with the Hanford layoffs in mind. That is why he ratcheted down the sales tax revenue growth by almost 50 percent.

Richland's projected sales taxes for next year are just less than $9.4 million in a $52 million general fund budget.

Fox said Richland plans to go ahead with projects at Howard Amon Park and road construction to connect Stevens Drive to Wellsian Way.

"We've seen Hanford cycles before, and they seem to have less impact. But this one may be different. We need to see if federal funding will be restored," said Deputy City Manager Bill King.

"Richland is very resilient. Our job is to make sure service levels are there. We will survive, but we are also very sensitive to our citizens," Johnson said.

"We've known the stimulus money would be going away since the day it arrived," Fox said.

Kennewick

Kennewick City Manager Marie Mosley said the city is doing nothing differently in the wake of Hanford layoffs.

"We constantly monitor our revenue and we make adjustments," she said.

Kennewick's largest and most volatile revenue source is sales taxes, but their conservative approach to budgeting provides enough of a safety cushion, Mosley said.

The city's sales taxes this year have been better than projected, but Mosley isn't spending the extra money "just yet," she said.

"We believe the effect of Hanford layoffs will be minimal. We are positioned to handle downturns," she said.

But that doesn't mean the future is clear.

"It is hard to say (when things will get better). We have the economy and the layoffs, both," Mosley noted.

Pasco

Most of Pasco's sales taxes come from car and RV sales, said City Manager Gary Crutchfield. The economic slump of the past few years has greatly hurt those sectors.

"We lost about $1.5 million in sales tax in 2010," Crutchfield said.

Auto sales had slowly been rising again to about 75 percent of the volume last reached in 2008. That trend is likely to stall, but not reverse, he said.

"My expectation is that despite the layoffs, we'll have a flat sales tax income," Crutchfield said. "We won't expect any growth."

As a result, "we certainly won't be expanding (the) work force," Crutchfield said. "We've tightened the belt and keeping it tight."

West Richland

West Richland Mayor Donna Noski is more concerned about 2013 and beyond than she is about Hanford layoffs affecting her city in the coming months.

"I don't think we get a lot of Hanford money here, and we already have sales tax leakage," she said.

Noski believes what money comes from Hanford passes through the area "heading somewhere else."

Of greater concern is that building activity could flat-line.

"There's some apprehension (among builders)," Noski said, adding that the uneasiness is more likely because of the state economy than Hanford cuts.

Benton City

Benton City Mayor Lloyd Carnahan said RV parks will be hit hardest because that is where many of Hanford's contractor work force live until their jobs run out.

And there will be some loss of sales taxes too, because Benton City's cafes are on the way to and from Hanford.

But the mayor is sure farming activity will continue to be Benton City's mainstay.

"They are the ones we count on. Our budget is OK. We are holding our own," he said.

Carnahan said the next nine months will tell whether Benton City is vulnerable to Hanford.

"Hopefully in that period of time, something else will come in for us," he said.

Prosser

City Administrator Charlie Bush said Prosser's well-being is only loosely tied to Hanford. It depends more on agriculture, food processing and the emerging wine tourism industry.

"A serious reduction in any of those would be more of a concern," he said.

Bush said Prosser residents who work at Hanford will be affected, but the city's concerns are more about regional services provided by the county, which depends in large part on sales taxes paid on Hanford projects.

"We are reshaping our budget for 2013 and 2014 to preserve our levels of service despite current and pending economic pressures," he said.

Hanford aside, Bush said Prosser's city council still wants to do aggressive economic development by building new infrastructure and working with the Port of Benton on its projects in the city.

Port of Benton

What's happening at Hanford will have minimal effect on the port, said port Executive Director Scott Keller.

The port has projects planned for next year and its rental income is solid and sufficient to cover annual expenses, he said.

Next year's budget is conservative, Keller said, but that won't interfere with redoing a taxiway at the Richland airport or installing an automated weather observation system at the Prosser airport.

Those projects have a majority of funding coming grants from the Federal Aviation Administration, he said.

"I think we are sitting pretty good. This is not hitting us that bad," Keller said.

Port of Pasco

Port officials in Pasco know the layoffs certainly will affect one of their sources of revenue -- money spent at the Tri-Cities Airport.

"We almost instantly see changes in people's traveling habits," said port Director Jim Toomey. "Business and discretionary travel will go down."

While air travel in the rest of the country decreased in the recession, business at the Tri-Cities Airport increased 20 percent from 2009 to 2010 and 8 percent this year, Toomey said.

That rapid growth is expected to flatten out now. Airport income next year is projected to be below last year's levels, Toomey said.

Still, the airport will have to be expanded sometime in the next five years to accommodate growth in the Tri-Cities.

Otherwise, the current layoffs aren't expected to hurt other port revenues because agriculture is expected to hold firm, Toomey said.

Port of Kennewick

Port officials in Kennewick knew the $2 billion for Hanford stimulus employment would be short term.

"We were working on the assumption that Hanford jobs would go away," said commission Chairman Skip Novakovich. "That's why we focused on projects that aren't Hanford related."

The port should weather the layoffs with no ill effect, he said.

And the port has no plans to take on any new debt next year, instead focusing on land sales. "We're pretty darn conservative, so we have a better chance of surviving," he said.

w John Trumbo: 582-1529; jtrumbo@tricityherald.com

w Jacques Von Lunen: 582-1402; jvonlunen@tricityherald.com

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