City’s Economic Growth Weaker Than Expected

ALBUQUERQUE, N.M. — Budget figures released this week show economic activity in Albuquerque was even weaker than expected over the last 12 months – and slower than the previous year.

Mayor Richard Berry said Thursday the city was being conservative when it projected growth of only 2.9 percent for the most recent fiscal year, which ended June 30. But the latest figures show an increase of only 1.9 percent in gross-receipts taxes.

“This national economy has not taken off, and it’s affecting us locally,” Berry said in an interview.

The slow growth means City Hall ended up with about $1.7 million less in revenue than expected. But the city won’t have to dip into reserves or take other steps to make up the difference because the administration also spent less than was budgeted – enough to offset the shortage, Berry said.

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The weak revenue puts pressure on the city in the current fiscal year, too, because the city’s revenue base will be lower than expected. Nevertheless, Berry said he doesn’t anticipate layoffs, service reductions or other dramatic changes at City Hall.

The 1.9 percent growth over the last year is little less than the corresponding figure for a year ago, when the city estimated gross-receipts tax revenue climbed about 2.4 percent.

The sluggish growth could intensify the conflict between City Council Republicans and Democrats over budget matters. Berry, a Republican, has successfully pushed for the city to set aside some of its operating budget to fund big capital projects, such as the Paseo del Norte interchange at Interstate 25.

City Councilor Debbie O’Malley, a Democrat, said the new revenue figures underscore concerns about whether it’s wise to set money aside that could otherwise help the operating budget.

“We must provide the basic services,” she said.

The city expects to spend about $475 million on those services this year through its general-fund budget. About $2.9 million is in reserve to serve as cash financing for capital projects that haven’t been selected yet, and about $3 million was set aside to pay off bonds for improving the Paseo del Norte interchange.

Final approval of the Paseo project will go before voters this fall.

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Berry said the capital money isn’t needed for operations and that spending it on construction will help the economy. The city has maintained services even while reigning in spending, he said, since he took office in late 2009.

“The idea that we have to grow the size of government to keep services whole – I’ve proven them wrong,” he said.

Some sectors of Albuquerque’s economy are showing signs of recovery, Berry said.

Retail trade was up about 3 percent and manufacturing 8 percent, according to figures he released. Construction was down a little less then 1 percent, and professional, scientific and technical services were down 2.3 percent.

“It’s a reminder that we need to be conservative moving forward,” the mayor said.

The budget for the coming year anticipates growth of about 2.4 percent in gross receipts taxes.

Municipalities in New Mexico watch the economy closely because they rely on revenue derived from business activity – gross receipts taxes – more than other government agencies.

— This article appeared on page A1 of the Albuquerque Journal

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