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City budget is still $3.6 million behind

Officials hope hiring freeze of more than 80 positions will bring a surplus.

June 02, 2010|By Melanie Hicken

CITY HALL — Stagnant sales tax revenues and fewer construction permits are expected to leave city revenues $3.6 million in the red at the end of the fiscal year this month, city officials said Tuesday.

The poor returns dashed any hopes that the slowly recovering economy would bring a much-needed infusion to the city. Even so, city officials on Tuesday said they did not project the need for more budget cuts this year because the revenue gap would likely be bridged with the current hiring freeze of more than 80 positions — perhaps even bringing the City Hall a slight surplus.

When city officials initially projected $3.7 million less year-end revenues in February, City Manager Jim Starbird said the gap could diminish from a potential increase in local sales tax revenue from the holiday shopping season.

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But on Tuesday, Finance Director Bob Elliot told the City Council the hoped-for upswing had not occurred, with year-end sales tax revenues still projected at $1.2 million less than originally expected.

Meanwhile, declines in local construction activity and dwindling investment earnings are even worse than projected in February, officials said.

Construction-related permits fees are projected to come in at $1.66 million less than expected by year's end, while revenue from the city's portfolio of investments will likely drop by close to $900,000, officials said.

"Our earnings have slid from our original estimates," Elliot said.

Property tax revenues also remain stagnant. Still, slight gains in other city revenues could leave the budget performing $100,000 better than anticipated earlier this year, officials said.

Significant reductions in revenue last year forced city officials to shave $9.7 million from the General Fund budget, which pays for most public services like police and libraries.

So far, the hiring freeze, employee wage concessions and dozens of eliminated positions have saved City Hall from widespread layoffs or mandatory unpaid work furloughs, measures other agencies statewide have been forced to institute.

This year's additional deficit comes even as the City Council works to balance a projected $8.1-million shortfall in the coming fiscal year.

The City Council this month is expected to adopt a General Fund budget that factors in $3 million in employee salary and benefits concessions, even if a deal with the unions isn't struck in time.

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