Charles E. Gillman Company Accounting Specialist Sales and Marketing Everready Glass Sales Reps Mechanical Komatsu Equipment Co Resident Field Mechanic Administrative & Professional Jorgensen Brooks Group Counselor Administrative & Professional Tucson Urban League CEO/President Trades/Construction RANCHO RESORT MAINTANANCE POSITION Tucson RegionCity expects its budget shortfall to reach $51MNew projected $10M further decline to force difficult cuts, officials say
Arizona Daily Star
Tucson, Arizona | Published: 10.18.2008
The nose-diving economy has added another $10 million to Tucson's projected budget deficit this year, pushing the shortfall to $51 million, according to a report released Friday.
The stunning breadth of the budget hole has prompted city leaders to say for the first time that midyear suspensions or eliminations of programs for residents are now on the table.
The City Manager's Office offered few ideas of what to put on the chopping block, leaving it to the City Council to make what will undoubtedly be some difficult decisions likely to anger some segment of the community.
The city released the report after new projections showed city sales tax receipts dropping another $10.2 million under a previous estimate, which was done only a month ago.
The city must balance this fiscal year's budget before the year ends next June 30. The council is set to discuss the deficitat its next meeting on Tuesday.
The only program identified for elimination so far is the city's Downtown TICET shuttle, which would save $550,000 this year, said Deputy City Manager Mike Letcher.
"We are going to be looking at other areas where we can suspend our expenditures, or in the case of TICET that can be considered for elimination," Letcher said. "These are unprecedented economic times."
Letcher said such decisions are being forced by projections that show an unprecedented decline in sales tax receipts. In the past 30 years, the city has never seen a decline in sales taxes, he said.
"Every month they are changing and not in the right direction," he said of sales taxes. "In 30 years, even through recessions, we had never gone negative. Two years in a row, that's unprecedented."
The city has already identified how it will make up $37.2 million of the now-projected $50.8 million shortfall. That includes $13.3 million in cuts to city departments, $2.3 million in leaving vacancies open, $10.7 million by restructuring debt, a $6.8 million loan repayment from the city Rio Nuevo redevelopment fund, $2 million in reduction to outside agencies and $2.1 million worth of reserves.
Letcher said that means the city needs another $13.6 million to balance the budget. About $2.7 million will come from not filling more vacancies, he said, but the remaining $10.9 million will need to come from a combination of suspending non-personnel operating costs, such as for cell phones, travel and subscriptions, along with program suspensions and eliminations.
Councilwoman Nina Trasoff said program cuts can't be avoided given the economic situation.
"I don't think we have a choice, honestly," Trasoff said. "It's extremely painful. We don't do it lightly."
Mayor Bob Walkup said Tucson is in a slightly better position than other cities, but he said the council is ready to make the necessary decisions.
"I don't think they're going to play politics. They're ready to make tough decisions," Walkup said of the council. "We've really got some homework and struggle."
The city has dialed back the cuts it is making to outside agencies from the city's budget, as the city is looking to only cut that budget by $2 million instead of the $2.9 million originally proposed. The $900,000 reduction comes from full payments already made to outside agencies and because of a decrease in the cut to the Metropolitan Tucson Convention & Visitors Bureau.
Trasoff said the reduction to outside agencies shows the city is being "as equitable as possible" with the cuts it's making.
The city has changed its budget-planning process for next year because of the dire economic numbers , Letcher said.
The council will start considering next year's budget in December, three months earlier than its normal schedule.
Trasoff said it's painful to think the next budget year could be worse, but she said it's a possibility.
Instead of planning for some kind of recovery, Letcher said, the city is instead preparing for "the worst-case scenario" because of the continuous drop in sales-tax receipts.
"Every month we see a further and further reduction in our revenues," Letcher said.
● Contact reporter Rob O'Dell at 573-4346 or rodell@azstarnet.com.
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