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Monday, April 28, 2008

Proposed City Budget Has Cuts

By Dan McKay
Journal Staff Writer
    The proposed budget cuts at City Hall follow years of solid spending growth.
    Made possible by a strong economy, Albuquerque's general fund— which pays for basic operations— has grown at roughly twice the rate of inflation under Mayor Martin Chávez, who took office in 2001.
    If you account for population growth, the increase isn't so steep. Spending has climbed about 8 percent beyond inflation on a per-person basis— from about $388 to $418, according to figures provided by the mayor's office.
    "As we grow, you've got more spending money," Chávez said in an interview. "The demand for services never declines."
    The amount of money available to spend each year is largely the result of economic activity. When times are good, of course, there's more available for the general fund.
    City voters themselves contributed to the budget growth by approving a quarter-cent hike in the sales tax to pay for expanded police, fire and social-service programs. The increase took effect in July 2004.
    But all that growth has left the city in a tougher position now, some city councilors say. The economy has slowed, the city is cutting the tax rate slightly and there are still plenty of services to provide.
    "We've grown so much now that, when there's a slowdown in the economy, you have to make really severe cuts," said City Councilor Michael Cadigan, who took office with Chávez in 2001.
    "If we hadn't grown the budget so quickly, the impact of the slowdown would be less."
    Chávez has proposed a $473 million operating budget for next year, about 5 percent less than what was budgeted for this year. He wants to cut about 200 vacant jobs from the city payroll and shift some of the city's construction budget into the operating fund.
    He said it's natural for government to shrink when the finances demand it. The city's bond rating, he said, was raised to the highest level possible by Standard & Poor's this month— a sign of Albuquerque's strong financial position.
    "Albuquerque today has the largest, best-equipped Police Department in history," he said. "We have the lowest unemployment in our history. We have a private sector that is the envy of" cities our size.
    The mayor typically proposes a budget by April 1, and councilors approve it— often with major changes— in May. The fiscal year starts in July.
    The city faces cuts in the 2009 budget now up for discussion.
    Council President Brad Winter, who lost a 2005 bid for mayor, said he wishes the city had set aside some money for the tough times ahead.
    "I think we're in this position because, two years ago, when times were good, we didn't put money in a rainy-day fund," Winter said.
    Winter cast the only vote against the budget two years ago, when he said the city hadn't tried hard enough to set aside money for tough years.
    Cadigan, who is chairman of the council budget committee, said much of the spending growth over the years has been toward public-safety programs, in keeping with the voter-approved tax. The city's animal shelters and adoption programs have also seen large increases, he said.
    Councilor Ken Sanchez, an accountant, said the city had to increase spending to provide services in growing neighborhoods.
    "I think we've improved the services in our community dramatically," he said.
    Cadigan said the city should at least consider limiting the amount of budget growth available to future city officials, though he said city rules might prohibit that.
    Winter had proposed the idea in 2005 as part of unsuccessful campaign for mayor.
    Sanchez said limiting budget growth "is easy to say" but difficult to carry out because of the demands for service and employee pay raises.
    Chávez said a "mechanical formula" isn't a good way to determine the budget. He said the city already adjusts its budgets in a way similar to the limited spending broached by Winter and Cadigan.
    The city has maintained adequate reserves.
    "We used human judgment to respond to different circumstances, as opposed to a computer," Chávez said.
    He pointed out that city general-fund spending over the last 20 years has generally stayed close to about $400 a person.
    It dropped to a low of $360 a person in fiscal 1993 and climbed to a high of $457 in fiscal 2007, according to a 20-year chart released by the mayor's office.
    In actual dollars, the city's operating budgets have grown about 47 percent under Chávez. The Consumer Price Index, which tracks price changes for urban goods and services, in that time has climbed about 20 percent.
    The voter-approved tax for public safety is a major part of the increase. It provides about $43.7 million a year, or about half of the amount of money in next year's budget that's above inflation.
    Anna Lamberson, the city's chief financial officer, said the inflation comparison is "absolutely inaccurate" because it doesn't account for population growth.