Tempe's forecast budget deficit may have doubled to $11 million, Mayor Hugh Hallman said Thursday, now that state officials are rethinking how badly the struggling economy will hurt Arizona.
Just last week, city financial officials said they were expecting a shortfall between $3 million and $7 million, with $5 million most likely. That came on the heels of a report showing sales tax receipts during the fiscal year's first three months were down 8.1 percent compared with the same time in 2007. But when the City Council sat down for its issue review session, Hallman brought the bad news.
City Manager Charlie Meyer said he and city staffers recently met with the Arizona Joint Legislative Budget Committee and learned that the state's revenue stream has slowed so much, the amount collected in 2007 won't again be matched until 2012.
"That's very different from what we've been forecasting," Meyer said.
On Wednesday, the joint committee revised its predictions to account for an economic recession. The state's deficit now stands somewhere between $700 million and $1.1 billion; two weeks ago, the estimate was between $500 million and $1 billion. Revenues from the state make up 30 percent of the city's budget, Meyer said.
Hallman said Tempe's share of the state's revenue pool is $3 million to $4 million less than what was expected. Both Hallman and Meyer said the city would not try to shore up the entire deficit this fiscal year. Instead, Tempe would tap into its reserves.
"This is not shooting for a budget target," Meyer said. "This is shooting for change in the way we do business."
The city has been considering reducing its 1,800 employee payroll by 70 to 100 jobs - largely through attrition. Workers submitted ideas on how to save money that included offering a four-day workweek and privatizing the city's golf courses.