Tucson is facing a projected $33.2 million budget deficit next fiscal year, City Manager Richard Miranda notified the City Council Tuesday.
And there is little the council can cut without affecting jobs or public services, Miranda said.
That's unlike some past deficits, when the city was able to make up part of the shortfall by delaying some spending or with creative bookkeeping.
The $33 million would represent a nearly 7 percent gap in the city's projected revenues versus expenses from its general fund.The new fiscal year starts July 1.
While Miranda offered no details where cuts would come or whether he will start scaling back now to lessen the blow next year, he said he has already evaluated 174 city programs and services to determine how critical they are and how much they can be cut.
Miranda said too many departments and services have become "outdated" and "inefficient."
Miranda offered few details about the restructuring, saying any plans are in the initial stages, and the plan is to allocate "scarce resources" to "front-line" city services.
For years, city finance officials have issued dire warnings about fiscal year 2015.
Miranda said changes, however difficult, are necessary to get the city's finances on track.
Tuesday was the first time finance officials publicly broached next year's preliminary budget numbers.
While the city once again will experience modest gains in sales taxes and state shared revenues, it won't be enough to keep pace with the ballooning pension and insurance costs, aging infrastructure and vehicle needs.
"We just have expenses that are outpacing the revenues we have coming in," said Joyce Garland, city program director for the Office of Budget and Internal Audit.
Some of the driving forces behind the projected shortfall include:
- Salaries, wages, up $6 million.
- Employee pension costs, up $5.5 million.
- Medical and dental insurance, up $2.4 million.
- First-year streetcar operation expenses, $2.2 million.
- Other transit-related expenses, up $4.3 million.
- Maintenance on city assets, up $3.3 million.
The numbers discussed Tuesday were preliminary, and few details were provided. Chief Financial Officer Kelly Gottschalk said the talk represented just the beginning of a long budget process.
Gottschalk said revenue projections could be lower based on factors out of city control, such as the state fund allocations and an unseasonably warm winter, which could result in lower public utility taxes, sales taxes and more.
She said grants the city relied on in the past to pay for police officers and other services either expire or are significantly reduced next year and in future years.
Other costs not included
The city staff left out $20.6 million of other immediate needs facing the city, such as maintenance projects, police and fire vehicles, and a citywide permitting system for the Planning and Development Services Department.
In addition, the city has around $1 billion in unmet needs for roads and other deteriorating city properties.
Council members commented only briefly on the numbers, since few specifics were available.
Karin Uhlich said she supports Miranda's approach and believes the city will find a solution.
She said the city shouldn't reflexively start cutting positions for lifeguards and other "front-line" city workers residents frequently interact with.
"That's not the right thing to do," Uhlich said. "We want to prioritize the services that the public expects for their money." She said city departments have too many layers of management and would support reducing those before cutting other employees.
Mayor Jonathan Rothschild was optimistic. about this year's budget even though every nickel will be scrutinized.
"In the year we knew was going to be one of the tougher years, we're off to a good start," Roths-child said. "It's going to take a lot of work, and it's going to take a little bit of sacrifice on everybody's part. But we will get through it, and hopefully get through it stronger."