Tuesday, March 18, 2008
City Facing Budget Bind
By Dan McKay
Copyright © 2008 Albuquerque Journal; Journal Staff Writer
Start with a tax cut and the potential for a $50 million budget deficit.
Sprinkle in generous union contracts for police and firefighters and a slowing economy.
Add it all up and you've got the recipe for a rocky budget season. Albuquerque city councilors are wondering how the mayor intends to pay for it all.
"I don't know how they're going to make it work," City Council president Brad Winter said in an interview.
The full answers won't come for another two weeks, when Mayor Martin Chávez is expected to propose an operating budget of roughly $500 million.
He said he won't seek layoffs or other drastic measures. Instead, salary savings from unfilled jobs and other belt-tightening will keep the budget in line, he said.
"This will be my 11th budget," said Chávez, now in his third term. "I've never submitted one that wasn't balanced and never will."
City Hall faces a financial crunch because of the tightening economy, a one-eighth cent sales tax cut scheduled for July 1 and flat sales-tax revenue.
A recent budget forecast estimated the city would face a $50 million shortfall next year if no budget adjustments were made. And that was before the mayor announced 5 percent raises for firefighters and double-digit raises and other financial incentives for police to boost recruitment expected to cost around $10 million altogether.
But Chávez says not to worry: The city can pay for it all by holding the line on other expenses.
"At the very first sign of (an economic) slowdown, we stopped filling positions," Chávez said.
The $50 million projected deficit is based on many assumptions, such as incremental increases in most expenses. Instead, city programs will see a "lack of growth," Chávez said.
There are some historic suggestions about how the city could go about bridging the gap. One possibility is carrying over unspent money from this year's budget. It's common for City Hall to end up with millions of dollars unspent because not every job is filled every day of the year, and revenue often outpaces estimates.
Still, some councilors are skeptical.
"I don't know how they're going to make any of these numbers add up," Councilor Sally Mayer said.
She and other councilors are eager to get their hands on the budget and see where Chávez finds the savings to keep it balanced.
Union leaders representing employees outside the police and fire departments are worried. Leaving jobs unfilled can affect service to the public, they say.
Giving big raises to public-safety workers but not others may lead to resentment.
"It concerns us that the budget is not even due until April 1, but all these promises are being made to police and fire without going to the council with the budget," said Andrew Padilla, president of the union that represents 3,100 city employees.
Padilla is a front-line manager for the joint city-county water authority and member of AFSCME-Council 18.
The mayor has told employees not to expect raises in line with what police and firefighters got.
Concerned or not, city councilors don't sound likely to refuse paying for the police and fire contracts.
Police officers "need to be compensated for the risks of the work they do every day," Councilor Ken Sanchez said.
Winter said the city needs to attract enough officers to expand the force. But he opposes the length of the three-year contract because it reduces flexibility down the road.
"I don't think it's right or ethical to do a three-year contract when we could have a new administration in that third year," Winter said.
The city typically negotiates only one- or two-year contracts with its unions. Chávez said the three-year contract helps spread out the costs. It also reduces the time spent in negotiations.
Councilor Michael Cadigan said he supports the police contract but wishes the raises had been phased in over recent years.
"We're going to have to be extremely austere with the rest of the budget as a result," he said.
Councilor Debbie O'Malley predicted that not everyone will be happy when it's all over.
"We're going to have to use every tool we know to make sure the city is solvent in terms of moving forward," she said.
By the Numbers
$503 MILLION: Expected total spending for the fiscal year that starts July 1, according to a city budget forecast released last month.
$54 MILLION: Amount that expenditures exceed available projected revenue the "shortfall" if no budget adjustments are made.
$10 MILLION: The cost of new contracts that provide raises and other incentives to police and firefighters. That doesn't include raises for other employees. The budget forecast was built on the assumption that raises for all city employees would be 2.67 percent.
ZERO DEFICIT: The city always passes a balanced budget, so ultimately there will be no deficit. The mayor can transfer in unspent money from previous years, leave vacant jobs unfilled or make other changes to bridge the shortfall.
APRIL 1: The mayor proposes his budget to the City Council at the beginning of April. Councilors usually take final action in May.