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Total city budget would top $1 billion for first time

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Albuquerque Police Chief Mike Geier, left, and Chief Operating Officer Lawrence Rael, listen as Mayor Tim Keller announces his 2020 operating budget proposal. (Adolphe Pierre-Louis/Journal)

Copyright © 2019 Albuquerque Journal

Buoyed by a one-time windfall created by an accounting policy change, Albuquerque’s budget would for the first time surpass $1 billion under Mayor Tim Keller’s newly introduced 2020 proposal.

Keller this week submitted to the City Council a $1.1 billion operating budget for the fiscal year that begins July 1. It represents an 11 percent increase in spending over the current year.

General fund spending – which covers most city government operations – would climb $65 million to $642 million.

Departments seeing the highest general fund appropriation increases over 2019 include:

• Albuquerque Police Department, $16.5 million.

• Albuquerque Fire Rescue, $9.6 million.

• Family and Community Services, $7.4 million.

• Municipal Development, $6.3 million.

Unlike last year when the city raised the gross receipts tax by three-eighths of 1 percentage point – an increment that equals about $58 million per year – Keller’s 2020 proposal does not include a tax hike, though it would increase fees or impose new ones in some areas.

Raises for employees

City workers would get a 2 percent pay raise under the plan, though those represented by unions could get more, based on their units’ agreements.

The plan also assumes the city will move to a self-insured model for health insurance, though that is not yet final.

Keller said at a news conference Wednesday on Civic Plaza the budget is “in many ways our ultimate expression of our values as a city,” noting on multiple occasions that police and fire together account for nearly half – 46.5 percent – of the expenditures. That’s about the same portion the two departments represent in the current budget.

Albuquerque has in recent years experienced some of the worst per capita crime rates in the U.S., though the most current figures released by APD indicate some improvement.

City Councilor Ken Sanchez said he thought Keller’s proposal properly prioritized public safety and economic development, and he had no obvious objections following his initial review of the 229-page document.

“It looks like they’ve worked pretty diligently” on the proposal, he said of the administration.

The City Council will hold public hearings on the budget and can begin making its own changes. It must approve a final version by the end of May.

The city’s total operating budget has never before exceeded $1 billion, though the 2019 version did come close at $997 million.

Accounting shift

The city is covering some of the increase with what Chief Financial Officer Sanjay Bhakta has called an “orphan month” of gross receipts and property tax revenue created by an accounting policy change.

The fiscal year runs July 1 to June 30, but the city has traditionally applied June’s taxes to the following fiscal year because they do not arrive until August. But a policy shift will extend the window in which the city can recognize that revenue – and the reset frees up an extra $34.3 million.

Bhakta called it a “correction” of current practices that aligns the city with state government and nearly all other governmental entities around the country, noting that Albuquerque’s external audit firm has blessed the change.

Sanchez, an accountant, said he supports the shift.

However, Lou Hoffman – who was finance director under former Mayor Richard Berry and previously city treasurer – said he does not approve of the idea, saying in an interview Wednesday the city “can’t play games with money.”

“They’re basing a budget on 13 months of revenue rather than 12,” Hoffman said.

One-time expenditures

Bhakta, who calls it a “one-time, lifetime” boost, said the city would not apply any of it toward recurring costs.

It will instead use about $29 million for a series of one-time investments. The largest include $6 million for public safety vehicles, which Sanchez said is paramount.

Some of APD’s newer hires are sharing vehicles with other officers, he said.

“We can’t leave new cadets coming into the department short,” he said.

Other one-time expenditures include $2.3 million for park security; $2 million for the business recruitment and growth fund LEDA and $2 million for housing vouchers and related programs.

Keller has focused on homelessness reduction and prevention, and the increase means the city could pay for 125 more housing vouchers. The city currently offers about 750.

“When people have housing, they are much, much less likely to be in the jail, at the emergency room, in the hospital or at a detox facility, all of which are very expensive public resources,” Family and Community Services Deputy Director Lisa Huval said Wednesday. “It actually costs us less to pay for a housing voucher than it does to do nothing.”

In addition to the one-time money, Keller’s budget includes $3.2 million more to pay for year-round operation of the city’s West Side emergency shelter, which until this year had only functioned during the winter.

Keller said the city “has a long way to go” to fully address its challenges.

“But after one year in office, I believe we know which direction to go,” he said Wednesday. “We also have seen some successes that we can clearly build on, so our focus for the fiscal year 2020 budget is really about doubling down on crime-fighting initiatives, homeless initiatives and economic development initiatives we have tested and piloted in the last year.”

New fees

While he is not proposing new taxes, Keller’s 2020 budget includes a new emergency incident cost recovery fee. That means the fire department could bill a resident’s auto insurance company when it reports to the scene of a car crash or vehicle fire. That’s expected to yield about $1 million and fund 12 of the 26 additional firefighting positions AFR would get in Keller’s 2020 budget.

“They’re actually going to go after that cost recovery, which a lot of cities do,” said Renee Martinez, the city’s deputy finance director. “We just haven’t done that in the past; we’re sort of out of step from best practices.”

The budget proposal also includes increasing the inspection fee AFR charges as part of the business registration process. It varies by square footage – and there are some sizes that will see no hike or even a slight reduction in the fee – but a business between 1,501 and 3,000 square feet would pay $100 compared to $60 currently. The budget also increases the fee Solid Waste charges for tire recycling.

But Keller’s proposal would actually eliminate one fee: the city would no longer require residents to license their pets. That will mean $305,000 less in annual revenue, but Martinez said there was no enforcement around it.

Other components of Keller’s budget:

• $711,000, including a one-time $300,000 infusion, for the ADAPT team that boards up blighted properties and starts the process for condemnation.

• $1 million the administration says will cover 80,000 summer and after-school program slots for kids.

• $172,681 to extend outdoor pool hours to 8 p.m. every night during the summer.

• And $176,000 more for Animal Welfare’s spay and neuter vouchers.

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