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Tuesday, January 12, 2010
New Forecast: City Faces $50M Shortfall
FOR THE RECORD: This story incorrectly stated that Albuquerque police are due for a 3.7 percent raise in the next fiscal year. City officials say the average police raise is actually 6 percent. Incorrect information was included in a 2008 administrative report summarizing the contract.By Dan McKay
Journal Staff Writer
Albuquerque City Hall should prepare to make more than $50 million in cuts or other adjustments in the coming fiscal year, according to the latest budget forecast.
A sizable chunk of the potential deficit — about $13 million — is due to multiyear union contracts agreed to in the previous administration.
Mayor Richard Berry, acknowledging that the $50 million is more than expected, offered few specifics on how the city will bridge the gap but said layoffs and furloughs "need to be a last resort."
The budget forecast, released Monday, estimates the city's general fund will have around $464 million to spend in the fiscal year that starts July 1. That's 10 percent below the $515 million in expenses forecast if no adjustments are made.
Gross-receipts tax revenue is down about 9 percent so far this budget year, compared to the same period last year. The new forecast predicts a 2.5 percent increase in gross receipts tax revenue next fiscal year, although that's not nearly enough to keep up with rising costs.
The general fund pays for basic operations of most city departments, but does not pay for capital expenses or city operations that support themselves, like the garbage department.
The $13 million in extra union salary expenses next year are due to three-year contracts signed in 2008 under the Martin Chávez mayoral administration. They include pay raises for police and firefighters. The agreements expire in 2011.
Police next year are to get a 3.7 percent raise, and firefighters are to get a 6 percent raise.
Other new costs coming online include completion of city construction projects that will have to be staffed, such as a renovated animal shelter; health insurance increases; escalating fuel prices and computer replacement.
Berry has already directed city departments to come up with a plan to cut their spending by about 4 percent this year, which should help next year's budget.
He said he will ask city unions to help identify ways to save money. But he didn't say whether he would try to hold back raises called for in the contracts.
Berry also refrained from saying whether he's disappointed that the contracts reduce his flexibility.
"We'll do the best we can to move forward," Berry said. "There will be some tough decisions to make."
Pay raises for other employees aren't built into the budget forecast.
Berry said he has already cut some top executive jobs to craft "an administration that's not top heavy," a move that should save hundreds of thousands of dollars a year.
David Campbell, the top administrator under Berry, said city employees are already doing more work than they have in the past because the city hasn't filled vacant positions. He added that residents can help the budget by buying local products that are taxed here, rather than through the Internet.
City Council President Ken Sanchez said the city has dealt with tough times before and survived.
"We're facing extremely difficult times economically and financially," Sanchez said. "We've faced these crises in the past."
The Berry administration will propose its budget to the City Council in April, then councilors will have about two months to make changes to it.
The size of the actual budget deficit faced next year depends on the economy and other factors. One estimate floated by the administration Monday put the shortfall at $54.6 million, but it could be bigger or smaller as new revenue forecasts come in.
Councilors approved a $475 million budget for this year, though the administration isn't expecting to actually spend that much because of declining gross-receipts taxes. Berry is already moving forward with about $19 million in adjustments to balance this year's budget.
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