Copyright © 2019 Albuquerque Journal
Albuquerque could face a $20 million deficit next year, according to a new economic forecast that anticipates higher spending on employee medical benefits and salaries and Police Department staffing, plus new costs associated with operating such projects as Albuquerque Rapid Transit.
But officials say they are not fretting over the projection, contending that it represents a liberal spending plan and that efficient budgeting should sufficiently mitigate any potential shortfall.
“I’m not losing sleep over this,” city Chief Financial Officer Sanjay Bhakta said this week.
Mayor Tim Keller’s administration is in the early stages of creating a budget for fiscal year 2020, which begins July 1. He must submit his proposal to the City Council by April 1.
The five-year economic forecast, issued last month by the city’s Office of Budget and Management, projects $622.7 million in general fund spending for fiscal year 2020, which begins July 1. That’s up $31 million, or 5.2 percent, from the current year’s budget.
The jump includes $6.3 million needed for capital implementation projects coming online over the course of the year. Among the largest allocations is $1.2 million for streetlight maintenance and signage; $1.2 million for the ART bus line; $900,000 for new expanded roadways; and $442,220 for the International District Library.
Additional spending also includes $6.9 million more for employee medical benefits, $4 million to fund a 2 percent raise for city workers and about $4.7 million to boost the Albuquerque Police Department’s officer ranks.
Keller’s administration has set a goal of hiring 100 new officers annually through fiscal year 2022.
The report estimates just 3.7 percent growth in general fund revenue. The majority of the revenue – 64 percent – comes via gross receipts tax.
Officials say the forecast is in some ways encouraging. The same forecast last year anticipated a $40 million shortfall for 2019, one reason the City Council subsequently approved raising the gross receipts tax by three-eighths of a percentage point.
That tax increase, which Keller signed, will bolster the city’s coffers by an estimated $50.3 million this year and $57.3 million in 2020, according to the report.
The council’s vote required that 60 percent of the funds raised through the hike go toward public safety.
“Because of recently improved economic conditions and stronger tax revenues, the city’s finances are in stronger shape than a year ago,” city economist Christine Boerner said in a news release. “However, public safety continues to require more resources and will be the top priority in this budget cycle.”
Bhakta said the administration is not considering a tax increase this year.
“That’s a big no,” he said.
He said he’s not overly concerned about the projected $20 million shortfall, partly because the spending built into the forecast is more of what he called a “wish list” than reality. It also does not account for cost reductions expected in the new year.
As part of 2020 planning, the administration is requiring each department to identify an area in which to save money without reducing services and to suggest a collaboration with another city department to somehow streamline operations.
“We are already optimistic they will come up with very smart, innovative budgets and that would help us fill that gap,” Bhakta said.
The CFO said the forecast’s revenue projection may also be conservative. It does not account for any bump associated with Netflix’s Albuquerque expansion or the potential benefits Albuquerque would receive with increased state spending.
Gov. Michelle Lujan Grisham and the Legislature have an estimated $1.1 billion in new money available for 2020, and any capital project boom generally boosts Albuquerque’s coffers, because the state’s largest city is a hub for professional services such as engineering and architecture, Bhakta said.
“We benefit from overall spending in New Mexico,” he said.
City Councilor Don Harris said he is also not overly concerned about the forecast, because it often presents a bleak picture.
“When we actually get down to the nuts and bolts of creating a budget, it always balances,” he said.