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With plummeting tax revenue forcing municipal governments around the country to furlough or lay off workers, Albuquerque Mayor Tim Keller said New Mexico’s largest city is not yet doing the same.
But he also acknowledged Friday that the “firewalls” that could protect city employee paychecks during the COVID-19 crisis are not sure things.
Officials say Albuquerque’s immediate budgetary decisions hinge on federal relief money, including the $2.2 trillion CARES Act. The city may qualify for up to $150 million in direct CARES assistance, according to its own estimates.
However, the CARES Act limits the money’s use to “necessary expenditures” incurred due to coronavirus and specifically precludes local governments from using it to pay costs already in their budgets.
The city of Albuquerque’s direct coronavirus costs are averaging about $100,000 per day, but the pandemic’s primary financial punch is coming via lost tax revenue due to the affiliated economic shutdown.
The CARES Act money cannot be used to plug those holes as of right now, said Albuquerque Chief Financial Officer Sanjay Bhakta.
But a concerted lobbying effort is underway to allow local governments that leeway, and Keller said the city would be willing to go to court to fight for the flexibility.
He said replacing lost taxes “is so much more important financially than giving us some money to buy 10 more buses,” alluding to other provisions of the CARES Act that could bring the city millions for transit-specific projects.
It is too soon to know how the coronavirus has depleted the city’s coffers.
Bhakta said preliminary estimates indicate the city will bring in $600 million in revenue this fiscal year, down from the $627 million expected. Keller’s administration has some planned spending reductions – trimming supply and maintenance budgets, limiting new hires, cutting some contracts – but they still leave a $17 million gap.
And the declines will keep mounting in fiscal year 2021, which begins July 1. Bhakta’s projections have revenue falling to $575 million next year.
“It can change – we don’t know the real numbers,” he said. “The revenue impact may be much sharper than we think.”
If the city is allowed to bridge the divide with CARES Act funds, it can fend off furloughs and layoffs within its approximately 6,000-employee ranks, Keller said.
If not, he said the city could dip into its $54 million operating reserve, but the city would request state help to return the reserve to required levels prior to the start of fiscal year 2021.
“If we don’t receive assistance from those two entities (federal and state government), then we’re going to be in a very difficult place and we are going to have to look at things like layoffs and furloughs,” Keller said.
Keller on Friday also vetoed legislation the City Council passed earlier this week that would have established a joint oversight committee of councilors and Keller administration officials to make recommendations about federal relief fund expenditures. Keller said the committee would add to the bureaucratic process and also echoed concerns expressed by some councilors that the committee would not represent all parts of the city.