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Mayor fears taxes will have to increase

Copyright © 2018 Albuquerque Journal

Albuquerque Mayor Tim Keller addresses his concerns during a meeting at the Journal. (Adolphe Pierre-Louise/Albuquerque Journal)

Faced with an anticipated $40 million budget deficit, Mayor Tim Keller said on Thursday he may be forced to renege on his campaign promise to raise taxes only with voter approval.

“I remember my stance on that, and I want to try and keep that stance and I believe in that stance,” Keller said in a meeting with Journal editors and reporters. But, “it would be fiscally irresponsible for me to say we should wait three years to get funding for law enforcement.”

Keller had said during the mayoral race that he would raise taxes only as a last resort for public safety and only with voter approval.

City Council President Ken Sanchez and Councilor Trudy Jones introduced legislation last month to impose a three-eighths percent gross receipts tax increase to help patch the deficit and address the city’s public safety problem. Keller said Thursday that if the council voted for the increase in March, it would go into effect as early as July 1.

But if he waits for the tax proposal to go to voters, he argued the passage of the state Legislature’s Local Election Act – which says nonpartisan elections must be held along with general elections – could make a public vote on the increase impossible until the general election in 2020.

“If the council can make a decision like that in a timely manner, it’s the difference between hundreds of new officers somewhere in the near future as opposed to three years down the road,” Keller said.

However, sponsors of the bill gave a different interpretation Thursday, saying special elections – like the one for calling for a tax increase – did not need to wait for a general election. (See story here.) The governor has yet to sign the legislation.

$40 million deficit

Keller was joined by Chief Financial Officer Sanjay Bhakta and Chief Administrative Officer Sarita Nair at the Thursday meeting.

The $40 million structural deficit is made up of a $25 million gap between projected and actual revenue and baseline budgeted expenditures, Bhakta said. That’s due in part to Albuquerque’s economy not growing at the expected rate and lower than anticipated gross receipts tax revenue.

Bhakta also said that, while the city has not experienced any increases in health care costs in the last three years, it is expecting those costs to be $6.2 million more next year.

The city is also facing an additional $2.1 million in expenditures for parks, medians, pools and other facilities due to a 5 percent water rate increase imposed by the Albuquerque Bernalillo County Water Utility Authority.

Bhakta said another $3 million is needed to cover a contribution to the city’s risk fund, which covers claims against the city. Payments to the fund have gone up by more than 50 percent in the last 10 years, he said, due to larger settlements.

Plus, the settlement agreement the city reached with the Department of Justice costs around $4 million a year to comply with.

Another challenge is the decline in the amount paid by the state to the city in “hold-harmless” checks. When the state exempted food and medical services from the GRT in 2004, it sent municipalities hold harmless money to make up the difference. That started being phased out last year. The city lost $2.5 million in 2016, and by next year the recurring loss will be about $10 million per year.

When the state decided to phase out the hold harmless funds, it allowed local governments to implement gross receipts taxes without going to voters. That’s the reason the City Council can implement the tax without voter approval.

The report created by the administration and other city employees listed more than 30 options for increasing revenue or reducing costs, including the gross receipts tax increase, which would raise $43.7 million annually.

They ranged from imposing 12 furlough days on city employees to save $15 million to increasing planning permitting fees to raise $4.45 million to closing at least one golf course to save $1 million to cutting Animal Welfare’s budget by 25 percent to save $2.75 million.

Keller said the GRT tax increase represented the “least worst option” of those.

Public safety key issue

Keller is hoping balancing the budget will help address the city’s burgeoning crime problem, but said the $40 million deficit does not take into account fully addressing the city’s public safety needs.

Even with increased recruiting efforts, the Albuquerque Police Department is experiencing an overall loss of eight officers per year.

About 880 officers are on staff at APD, and the city estimates 1,200 to be an optimal number.

According to the report, the city would need to spend a minimum $88 million increase over fiscal years 2018-2022 in order to add 100 new officers a year until it reaches the 1,200 goal. That doesn’t include pay increases intended to boost recruitment and retention.

While compensation for rookie APD officers is competitive, the report found that competitiveness decreases with an employee’s longevity when compared with surrounding cities such as Denver, Austin and Phoenix.

Keller said there is a common misconception that “thousands” of people apply to APD and hardly any are accepted.

The report shows that of 1,369 “interest cards” received, just 200 attend the entrance exam for each class and 28 of that group make it through the academy.

Nair said the city has developed a variety of options to increase recruitment, including upping hiring and referral bonuses.

Another option would be to create a program that would allow the department to remain connected to rejected applicants and assist them in correcting issues that may have prevented them from making the force such as physical fitness or credit scores.

Keller pointed out that many of the officers have become generalists – to address street crime – slashing the number of detectives in such specialized units as narcotics, burglary, DWI and auto theft.