Just 10 days into Mayor Annise Parker's second term, a brewing budget storm threatens a continuation of the difficulties she faced in her first term.
Kelly Dowe, the mayor's finance director, has not yet estimated how big the problem is, but outside a City Council committee meeting this week he listed $47 million in increased expenses or decreased revenue that the city may have to make up for in the budget for the year that begins July 1.
Because sales tax revenue has been increasing in recent months and property tax revenue could be higher in the coming year, it is far from clear how big a budget hole might exist. It also is unclear whether increased employee health care costs and other expenses will add to the challenges. The squeeze, however, could divert money and attention away from some of the priorities Parker outlined in her inaugural address last week, such as assistance to small businesses, incentives to city departments to spend locally, and alleviating homelessness.
Most of the money Dowe identified is in increased pension costs. In fiscal year 2013 the city will owe its municipal employees' pension fund $10 million more than it does this year. Its annual police pension bill will increase by $27 million. And it patched last year's budget with a one-time windfall of $10 million by spinning off its convention department.
To offset those millions in balancing a $1.8 billion budget, the mayor and City Council must either raise more money or spend less of it.
City layoffs
Last year, the mayor and council laid off 764 city employees, though more than 200 found other jobs in city government. They reduced spending by $100 million with no tax increase and without laying off any police or firefighters. However, they also relied on accounting maneuvers and collecting several years' rent on convention facilities.
Because neither the mayor nor council has received a description of the coming year's budget problem, they have not discussed how to solve it.
Employee compensation accounts for a majority of the general fund budget. To save enough to offset the $47 million identified by Dowe through layoffs alone, the city would have to eliminate more than 800 jobs.
Shortfall estimate
Dowe said he expects to deliver his first estimate of the 2013 budget shortfall to the Long-Range Financial Management Task Force next week, and to the mayor and City Council shortly thereafter.
The task force is charged with advising the mayor on how to put the city on firm financial footing for decades to come. Its members have submitted ideas for short-term savings, such as outsourcing some city functions, removing seniority as a factor in layoffs, ceasing all funding for the arts, and salary and hiring freezes.
The council passes the annual city budget in June.
chris.moran@chron.com
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