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MAYOR HANNEMANN ANNOUNCES SOLUTIONS TO $128 MILLION SHORTFALL
The City has slashed an expected $128 million revenue shortfall to $50 million through spending restrictions, a hiring freeze and other proactive budgeting decisions, and Mayor Mufi Hannemann today proposed a lean and balanced spending plan for the coming fiscal year that includes no cutbacks to essential services which protect public health and safety or key infrastructure.
“We must tighten our belts to face these tough times, but we will not create the illusion of savings by neglecting our community’s needs in ways that would cost everyone much more in the future,” Mayor Hannemann said. “Our roads, sewers and facilities have been hampered by decades of previous neglect, and we must not repeat the mistakes of the past. We will continue our important infrastructure improvements, and we intend to remain the nation’s safest big city.”
He emphasized that demands for City services have not decreased amid the economic downturn the way they have for some products and services offered by the private sector. In fact, the construction of new homes and other growth has increased the demand for public services such as police and fire protection, and road and sewer maintenance.
The Mayor’s spending plan includes a $1.81 billion Executive Operating Budget for the fiscal year that begins on July 1, just 0.28 percent more than the budget approved by the City Council for the current fiscal year. The operating budget pays for the City’s ongoing expenses, such as fire and police protection and park maintenance.
“I want to emphasize that the operating budget would increase by less than one percent,” Mayor Hannemann said. “We are holding the line on overall spending despite the increase to fixed costs in several areas, such as pay increases for police officers and firefighters that were already approved through collective bargaining and total $20 million; debt service payments, which will increase by $24.2 million; and employer health contributions (EUTF), which will increase by $16.5 million.”
The operating budget will reflect voluntary pay cuts of five percent for Mayor Hannemann and his appointed Cabinet, in recognition of the economic downturn. In addition, twelve City agencies would have smaller individual budgets than in the current fiscal year.
The plan also includes a proposed $1.7 billion Capital Improvement Program budget for major construction projects, the purchase of heavy equipment and other long-term investments. This is 77.5 percent more than the current year’s CIP budget, but the increase is mostly attributable to $1.1 billion in funding for the city’s rail transit project. If transit were not included, the proposed CIP budget would be $627 million, or 34 percent less than the current year’s $954 million CIP budget.
It is important to understand that the proposed CIP budget that includes rail transit would not require a major increase in tax or fee revenue in a single year. The transit project is being funded largely by the 0.5 percent
It is also important to recognize that some critics may attempt to create wildly distorted impressions about City spending by lumping together the operating and capital budgets and comparing the total to that of previous years. That would be very misleading, and a disservice to
“The truth is that our proposed operating budget is virtually the same size as that of the current year,” Mayor Hannemann said. “The larger CIP budget reflects a major investment in public transportation that voters have endorsed. Taking transit-related spending out of the picture, our proposed CIP budget is actually far smaller than in previous years.”
The City projected a $128 million revenue shortfall for the coming fiscal year because of the poor economy and slumping real property assessed valuations, but spending restrictions and other proactive measures have cut that figure down to $50 million. To help alleviate this shortfall, the Mayor is asking the Council to increase certain taxes and fees, most of which have not been adjusted in many years. These include adjustments to:
· the motor vehicle weight tax, which would increase from $0.03 per pound for passenger vehicles and $0.035 for trucks to $0.04 and $0.045 respectively;
· the highway beautification fee, which would increase from $5 to $6;
· bus fares. The single adult fare would increase from $2.00 to $2.25, and the cost of adult monthly passes would increase from $40 to $50 (no change for seniors or disabled). Four-day passes for visitors would increase from $20 to $25. The increases are being proposed largely because of a requirement that fare box revenue pay for at least 27 percent of bus operating costs;
· golf green and cart fees. Green fees with golf ID would increase from $16 to $19, and Junior fees would increase from $9 to $12. Golf cart fees would increase from $16 to $19;
· zoo entrance and parking fees. Child entrance fees would increase from $1 to $3, adult resident fees would increase $4 to $6, and nonresident fees would increase from $8 to $12. Zoo parking fees would increase from 25 cents to $1.50;
· park attendant fees, which would increase from $10 to $15;
· alarm permit fees. The permit fee would increase from $15 to $25, and the renewal fee would increase from $5 to $25;
· special duty police fees. The administrative fee for a single officer would increase from $7 to $14, and from $1 to $2 for each additional officer, and;
The spending plan also requests that the City Council raise the residential real property tax rate by $0.30, from $3.29 to $3.59 per $1,000 of assessed value. If approved, this rate would still remain $0.16 lower than the $3.75 rate that was in place when Mayor Hannemann took office in 2005.
Mayor Hannemann is asking that a $75 real property tax credit be offered to qualified homeowners for the coming year. This would be $25 less than the $100 credit offered in the current year.
It is expected that the increased tax rate and smaller tax credit would raise the average tax burden for a single family home by approximately $10 per month.
Media contact: Bill Brennan, Mayor’s Office, 527-6928