While the cuts already made will help somewhat, there is still a lot more pain to come.
"No one is predicting with any certainty when this current recession will end," City Manager Mike Hein wrote to the council. "The city will be prepared for the worst and is planning for it."
Expanding on that sentiment in an interview, Hein says the City Council needs to first agree on revenue estimates for the fiscal year which begins on July 1. However, Hein admits that arriving at those figures might be difficult because of what he labels "uncertain winds" coming from the Arizona Legislature about revenue that the state shares with local governments.
At the same time, Hein acknowledged that the worst of the recession may be yet to come. "Have we reached the (economic) bottom yet? The only expectation is 'no,'" he said last week--even though seven months ago, he stated that he never expected to see another year of revenue decreases for the city.
Hein has listed numerous options for the council regarding how to balance next year's budget--but one thing he won't recommend is more dipping into the city's reserve accounts.
Hein points out that the adopted policy is to have 10 percent of the city's annual general operating expenses in reserve--but he expects it to be less than 7 percent for the current budget.
Earlier this year, Hein was severely criticized by some city employees for not dipping further into this money. (See "Cops and Budgets," May 8.) However, he continues to insist that he won't suggest spending any more of these "rainy-day" funds than the city already has.
"It's going to rain harder next year," Hein predicts.
Instead, Hein is proposing that the City Council make cuts (or increase revenues) from a long list of possibilities, raging from the elimination of some entire departments to increasing the level of fees and fines.
Another option under consideration is employee furloughs. Saying these mandatory days off without pay would have to exclude public-safety personnel and would need to meet the requirements of adopted ordinances, Hein estimates this move could save $266,000 per day if it impacted all salaried workers (but not those paid on an hourly basis).
Among other possibilities listed by Hein for balancing next year's budget are selling some city-owned land and reducing support for so-called outside agencies.
Councilman Steve Leal has some specific suggestions in both these categories. He believes the council should authorize the sale of 320 acres of city-owned land on south Houghton Road. Leal estimates the property, once slated to become a golf course, might fetch at least $15 million, even in these bad economic times.
Leal would also like the council to look at its annual contributions to agencies like the Pima Animal Care Center (PACC) and Tucson Regional Economic Opportunities (TREO).
"We give $1.4 million to animal control," Leal says, "but the people of Tucson are already helping to pay for it (through their county taxes)."
According to the agency, every incorporated community in Pima County pays something for services provided by PACC. So far this fiscal year, these figures have ranged from a few thousand dollars from South Tucson to more than $40,000 from Marana.
As for TREO, Leal says he supports the organization, but believes the city's yearly $1.4 million allocation is $400,000 too much. Leal indicates that he wants to stop subsidizing the area's bedroom communities, which he believes don't contribute their fair share to the agency.
Almost two decades ago, the council faced a somewhat similar financial crisis. It had to cut $30 million out of its $530 budget over a two-year period.
To accomplish that goal, it took the standard steps of eliminating empty job positions, reducing funding to most outside agencies by 20 percent, and holding a public hearing with city employees to get their input.
This time around, the city is looking at cutting more than $70 million from about a $1 billion budget. It is establishing a Web site to obtain city-employee comments and has already eliminated 162 vacant positions while cutting funding to most outside agencies.
Despite those similarities, Leal--who was a new member of the City Council in 1991--sees some important differences between the two experiences.
"We were much more open and had more of a partnership," he says of the City Council 17 years ago. About the current situation, Leal observes: "It doesn't feel like we're all in this together."
Leal sees other important differences between the two periods, as does Tom Volgy, who was mayor in 1991.
"This is even worse," Volgy says of the current budget problem. "In 1991, we knew we were dealing with a short-term time horizon."
Volgy offers some advice to the current City Council.
"Some people will be dramatically hurt by budget reductions," Volgy says, "while others will be inconvenienced. The council needs to know the difference."
