A hiring freeze and other changes at the city of Tucson are helping fill in the city’s budget gap, the city manager assured the City Council on Tuesday.
But the gap is still wide, at a $25.6 million structural deficit next year.
City Manager Michael Ortega gave a budget update with actual figures through February and projected numbers for the rest of the fiscal year ending June 30.
Sales tax revenue growth is a mere 1 percent, including extra income from annexations and a tax amnesty, without which the sales tax revenue would be flat, said CFO Joyce Garland.
Income from fines is down about $3.3 million, due to a steep drop in citations and the end of the photo traffic enforcement program. Offsetting those drops are one-time land sales and better-than-expected bed tax income from tourism.
Altogether, the revenue side of the city budget now is expected to come in about $1.3 million better than budget.
On the spending side, the city now expects to spend about $2.9 million more than budgeted, including $2 million more than projected on overtime for fire academies and higher than expected spending on animal care, utilities and uniforms.
Hiring freezes and buyouts have saved about $9.4 million, Ortega said.
The difference between income and spending will be paid for from reserves as planned.
Looking ahead to the next fiscal year, which begins July 1, the city is projecting flat sales tax and property tax revenues.
It will try to bring in $2 million from property sales, although Mayor Jonathan Rothschild said that’s a conservative figure.
“Obviously the big costs are pension costs. … That is the lion’s share of that increase in expenses over the next year,” Ortega said.
Including the planned staff reductions and other changes, the apparent shortfall for fiscal year 2017 is $25.6 million.
Ortega said his team is working on solutions, and he will begin to bring recommendations to the City Council March 8, including spending cuts and fee increases.
“Nobody will want to move toward increased fees,” Council Member Steve Kozachik said in a letter to constituents. “But we’re obligated to balance the budget, so status quo isn’t an option.”
The hiring freeze, buyouts and other changes have helped the improve the budget situation. In December, Ortega was talking about a $42 million deficit for fiscal year 2017.
“There’s a lot of panic,” Ortega said, “particularly amongst the employees about that shortfall, and what I’ve suggested to you and what I’ve suggested to them is this: It will be a team effort.”
