The City of Mesa forecasts it will have an $8 million to $9 million shortfall in the next fiscal budget, which starts July 1.
Candace Cannistraro, Mesa’s management and budget director, gave the financial prediction to city leaders Thursday morning during an annual strategic planning meeting.
Cannistraro said the slow economic recovery is to blame. While the city has made cuts during the recession, it relied on funds it put in reserve to help fill a gap the past few years. In fact, no budget shortfalls were forecast for the current-year budget. Mesa’s general fund this year is about $308.5 million, Cannistraro said.
But reserves the city relied are getting low, and as scheduled, not much will be available for the 2013-14 budget, she said.
The city knew during the past few budget seasons how much it had to use in reserves, but the hope was by now that revenues would start increasing. And while general fund revenues have increased, it isn’t enough.
“The recession is over, but the recovery is taking a lot longer,” Cannistraro told the city council, Mayor Scott Smith and city employees. “Economists just keep pushing it out.”
Total revenue funds for Mesa in 2013-14 are expected to be in line with the amount of funds the city generated in 2005-06, Cannistraro said.
Showing where the city needs additional funds, Cannistraro presented a picture of how much benefit and pension costs have increased for city, police and fire personnel since 2005-06. Since then, costs have risen 40 percent to 115 percent per employee, she said.
Even though the city has far fewer full-time employee positions – 487 fewer to be exact – expenses are rising.
The city is also facing future expenses with operations and maintenance of new parks and facilities that will be built using bond funds approved by voters in November, Cannistraro said.
Cannistraro said the last few times Mesa has had to make cuts, it’s asked each of its city departments to plan budgets with across-the-board reductions
This year, Cannistraro said city staff will work with each department independently to determine where savings can be found.
The city is also going to look at system wide expenses – such as its employee benefit trust fund – to see if changes can be made in when some payments are made. City manager Chris Brady said there may be an opportunity to alter payments to the trust because right now it is, “healthy.”
Brady also told the council that the city’s utilities, “are looking pretty good,” and he didn’t expect a rate increase for next fiscal year. If that holds, it would mark the second year in a row that rates have remained the same.
The council should adopt a tentative budget on June 3, with a final budget adoption on June 17.
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