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CHRISTMAS CRASH

It's not often that a budget briefing brings hundreds of people down to a City Council meeting on a Tuesday afternoon.

Then again, it's not often that the city is discussing how to plug a massive hole in the budget with only six months left in the fiscal year.

Worried after headlines announced that the city was considering cuts of 15 percent to all city departments, supporters of the police and fire departments came out in force to hear City Manager Mike Letcher deliver the bad news to the mayor and council on Tuesday, Dec. 15. After the council chambers filled up, hundreds of people were left to listen in the lobby and on the sidewalk outside.

Letcher was cast in the unfortunate role of the Grinch Who Stole Christmas. He had to inform the City Council that, like nearly every other government in the state, the city is in dire financial shape, with a projected budget shortfall of roughly $32 million. While spending has stayed within the budget, the city isn't collecting as much money as officials had estimated it would.

The biggest chunk is a drop in sales-tax collections, which are expected to come in $10.1 million below forecast. The city also didn't get $5.3 million that it is owed from a lawsuit, and various other funds are coming in below expectations.

"We need to immediately close this budget gap," Letcher told the council.

Letcher presented the City Council with a menu of possible spending cuts, including reducing money to outside agencies, eliminating vacant positions, holding off on contributing to the city's rainy-day fund, refinancing $1.5 million in debt and cutting off a program that helps people in tough straits with water-bill payments. The council will also be faced with raising fees for Parks and Recreation programs, including sports leagues and leisure classes.

But even all of that would just nibble around the edges of the problem. While council members were reluctant to admit it (especially with Christmas just around the corner), the city could be forced to lay off employees and reduce city services. At the very least, employees are likely to see reduced benefits and more furloughs.

Letcher is calling for structural changes in the city budget—the kinds of changes that are often politically unpopular.

"We're out of one-time fixes," Letcher told the council.

Among the new proposed taxes: a short-term "landlord tax"—the rebranded rental tax that the council rejected earlier this year—that could sunset in 2016, as long as voters approve a new property tax to supplement funding for public safety, streets, buses and parks.

After digesting Letcher's briefing, Councilman Rodney Glassman busted on Letcher for not bringing forward the falling revenue figures before: "It would have been nice to know this sooner."

Letcher told Glassman that the shortfall developed rapidly over the last 60 days. He also defended the hiring of a new assistant city manager, saying that the number of assistants he has—three—is still less than the number employed by previous administrations.

Newly elected Councilman Steve Kozachik, a Republican who replaced Democrat Nina Trasoff in Ward 6, said the city should avoid cuts to the police and fire departments.

"We need to do everything we can to hold them harmless," he said.

But after the meeting, Councilwoman Regina Romero warned that police and fire would likely be facing cuts along with the rest of city government.

"It's not possible to leave public safety untouched without gutting core services," she says.

The council is slated to discuss options on Tuesday, Jan. 5.


A CHRISTMAS MIRACLE: THE RENTAL TAX IS REBORN

City Manager Mike Letcher's proposal for a rental tax—or, excuse us, a "landlord tax"—is sure to be the most contentious piece of the plan that council members will be asked to approve in early January.

The rental tax has been brought up a few times in recent years, giving the Arizona Multihousing Association the chance to show it can turn out hundreds of angry people to oppose the tax and government in general.

Barbara Dolan, the local AMA lobbyist, says City Hall is trying to "sneak through" the rental tax while people are distracted by the holidays.

"It's an awful holiday present from the city to the renters of Tucson," Dolan says.

The city has considered a 2 percent tax on residential rental payments a couple of times over the last decade. The most recent time came earlier this year, when council members ultimately rejected a proposal from Letcher that would have raised something in the neighborhood of $12 million annually.

Rental-tax boosters have argued that every other major city in Arizona, except for Flagstaff, already charges a similar rental tax.

At least four members of the City Council remain leery of a rental tax.

"Until we correct inefficiencies in our current operations, it would be inappropriate to balance the budget on the backs of renters," says Ward 2 Councilman Rodney Glassman.

Newly elected Ward 6 Councilman Steve Kozachik also says the city should find another way to balance the books.

"I don't like it," he says.

Ward 1 Democrat Regina Romero says the city should put any rental-tax proposal on the backburner and instead look at cutting spending.

"Let's not even talk about it until we look at structural changes," says Romero, who is more supportive of Letcher's proposal that the city ask voters to approve a small property tax to support core services.

She and Ward 3 Democrat Karin Uhlich say the city should also look into trimming pay packages for city employees to bring them in line with Pima County and should consider bigger pay cuts for higher-paid employees.

Ward 5 Councilman Richard Fimbres says he's troubled by the idea of a rental tax.

"That's a hard one," Fimbres says. "I'd rather see other alternatives."

And where does Mayor Bob Walkup stand? The Skinny caught up with hizzoner last week at a reception for the new council members at McMahon's Prime Steakhouse. When we asked Walkup if he was taking a position on the rental tax, he smiled, stepped away and then turned to us with a big thumbs-up before greeting another constituent.

That's our mayor: ambiguous but positive!


CHRISTMAS CHARITY

These are tough times for everyone, but you still have a chance to help out a nonprofit like the Community Food Bank or the Primavera Foundation with a year-end contribution of up to $200 (or $400 per jointly filing couple) that you can get deducted directly from what you owe in state income taxes. (Assuming, of course, that the state will have enough money to issue refunds—but let's not get into that right now.)

Our favorites include Casa Maria, Habitat for Humanity, Youth on Their Own, the Southern Arizona Center Against Sexual Assault and the domestic-violence shelters run by Emerge!

You can also get a tax credit for contributing to your local public school, so give that a thought.

If you're still looking for those end-of-the-year tax deductions, may we suggest a few friends of The Skinny that won't get you a direct refund from the state, but are still good causes who could use a bit of charity: KXCI FM 91.3, Arizona Public Media (aka KUAT-TV and KUAZ radio), the Loft Cinema and the Rialto Theatre Foundation.

Check out our Web site for details on how to make contributions.

Find early and late-breaking Skinny at The Range, our daily dispatch.

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