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Facing a year of unparalleled financial struggles, the City of Santa Fe released its proposed budget for fiscal year 2021, which includes large budget cuts for many departments but no additional furloughs or layoffs for city workers.
“It’s a budget that is very mindful of our commitment to our employees,” said Mayor Alan Webber in a virtual press conference Monday.
The new budget also includes plans to consolidate multiple city departments with the goal of increasing efficiency in city services.
In May, the city announced an expected $100 million deficit for the next fiscal year, as COVID-19 pounded Santa Fe’s tourism-based economy.
Finance Director Mary McCoy said recent data put that number closer to $82 million, still leaving the city in a difficult fiscal position.
City officials responded to the pandemic initially by placing more than 1,000 city employees on furlough in April, a decision that drew ire from workers and union officials alike. Webber, though, said those early furloughs put the city in a better position to craft a balanced budget for the next year.
“It put us in the position where the budget we have now has much more flexibility,” he said.
Under the proposed plan, no new furloughs will be implemented beyond Sept. 4, and only department directors would see a cut in pay.
However, the city is still planning on eliminating positions.
For example, 13 positions in the Parking Division – one of the hardest hit by furloughs – will be eliminated and the employees will be transferred to other jobs in the city.
Eligible employees will also be offered an early retirement incentive in the form of $15,000. McCoy said the goal of the incentive is to encourage vacancies to reduce the amount of money spent on salaries, with $1.5 million going to the retirement program.
In total, position cuts and a hiring freeze are estimated to save the city $7.5 million.
And while revenue losses have not been as massive as anticipated, huge spending cuts have still been proposed. The budget recommendation includes $19.6 million in cuts to operating costs, due to many city employees working from home, and another $16.7 million cut from capital projects.
An additional $22 million in cash surplus, McCoy said, will be used for operations from 18 different city funds, the largest of which would be the city’s bus transit system, using $6.2 million of surplus.
Members of the Finance Committee spent Monday in the first special budget hearing to discuss specific items of the FY2021 budget, mainly the Public Works and Public Utilities Departments. These public hearings will be held every day until Friday, each focusing on a different sector of the city’s government.
Another key feature of the budget is the consolidation of many city departments. In total, 12 departments will be reorganized into three new departments: Community Development, focusing on areas like housing and tourism; Community Health and Safety, which includes the police and fire departments; and Community Engagement, which combines the City Clerk’s Office with Constituent Services.
Parks and Recreation would also be split into two different departments.
City Manager Jarel LaPan Hill said the budget crisis has given the city the opportunity to reevaluate how its government looks.
“Even in the face of all this uncertainty, it’s actually even more important to build on the progress we’ve made in the past two years,” LaPan Hill said.
Webber said the reorganization’s purpose is to make city services more efficient for residents and that he does not expect any significant savings as a result.
“I don’t anticipate necessarily in the short-term a lot of savings from this kind of a reorganization,” he said.
The mayor and City Council are scheduled to vote on the final budget at its meeting on July 29.