Keller: City's economic position better than most - Albuquerque Journal

Keller: City’s economic position better than most

Copyright © 2020 Albuquerque Journal

The grass may be greener in Albuquerque than it is on the proverbial other side.

It just might not be perfectly manicured.

While Albuquerque’s municipal government coffers have fared better during the COVID-19 pandemic than those of many other large American cities, Albuquerque Mayor Tim Keller said the virus has nibbled away enough revenue that residents may start to notice slight reductions in service.

With fiscal year 2020 gross receipts tax revenue finishing nearly 5% behind expectations – and a similar drop expected in 2021 – the city continues with a hiring freeze. Keller said that means fewer people performing code inspections, driving buses and maintaining parks, although the city was not able to provide specific numbers of frozen vacancies.

Mayor Tim Keller

“Instead of the park getting mowed every week, (maybe) it’s going to be getting mowed every 10 days. Those kind of things are inevitably going to happen when we’ve had a long-standing hiring freeze,” Keller said Monday when asked to explain how the revenue declines might affect the community. “But by and large, (for) any major initiative, we expect government to continue on as it normally would with just minor delays in some services.”

With his administration set this week to submit its 2021 budget proposal to the City Council, Keller and his chief financial officer outlined the city’s present economic position during a Monday news conference at City Hall. Overall, it is brighter than officials had anticipated at the start of the pandemic.

GRT revenue came in about $19.9 million short of projections for the 2020 fiscal year that ended June 30, but it still surpassed 2019 numbers, thanks in part to a new Internet sales tax stream.

The city also benefited from $150 million in restricted federal coronavirus relief funding, which Keller said was instrumental in avoiding furloughs and/or layoffs among the city’s roughly 6,000-person workforce.

Albuquerque is better situated than nearly every other large U.S. city, according to a New York Times report centered on new research. Albuquerque’s expected 2021 revenue loss is the second-lowest of 40 cities analyzed. Only Boston fared better in the research from Howard Chernick, David Copeland and Andrew Reschovsky.

Keller said the city’s rate of federal employment provides some stability, and being the state’s health care center is also a boost. That, combined with a strong pre-pandemic economy, has helped weather the storm, he said.

“Our city on a relative basis is actually not doing as bad as we thought,” he said. “It’s sort of a silver lining (that) things aren’t as bad as we thought they were.”

The city is not expecting an instant recovery, but rather something shaped more like the Nike “swoosh,” according to research from the University of New Mexico’s Bureau of Business and Economic Research.

For instance, Albuquerque is not likely to restore pre-COVID-19 employment levels until the middle of 2024, BBER’s analysis shows.

“One would expect the opening of businesses and unemployment (numbers) to have direct correlation,” Albuquerque CFO Sanjay Bhakta said. “There is some correlation, but it’s sort of lagged behind.

“If we start to open right away, it doesn’t mean unemployment will decline at the same time.”

Some industries, including retail, may never see a complete rebound in the next five years.

And BBER’s analysis noted that incomes may take a beating without the federal support offered early in the pandemic, including the $1,200 stimulus payments and the weekly $600 boost in unemployment benefits.

Albuquerque officials expect that revenue from the gross receipts tax, assessed on the sale of most goods and services, will continue dwindling in fiscal year 2021, which began July 1. They anticipate a $19.6 million year-to-year drop but will reevaluate the budget in December.

“When we talk about our economic numbers, we know we’re all probably going to feel this – we’re going to know someone in our family out of work or who has had their pay cut; we also know we’ll see increased stresses on everything that’s economically driven, whether it has to do with crime or increases in our social services,” Keller said. “But I will also say I think we should be grateful we live in Albuquerque, because it’s a lot worse (elsewhere).”

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