Fresh from filling last year’s budget hole, the city announced progress on this year’s deficit — though more layoffs are coming next week.
The news came at a press conference in City Hall Wednesday, where Mayor John DeStefano, Jr. gathered troops for a budgetupdate.
The mayor brought good tidings: The city came back from a $13 million hole to close out its FY07-08 budget with a surplus. And as for the current fiscal year, it has made some headway towards closing a $6 million budget gap.
What was once a $6 million deficit has been pared down to about $4 million, DeStefano announced. The rest, however, will be made through union concessions — including job cuts.
“There will be layoffs,” the mayor said. He wouldn’t say how many, but he said the city’s plan is being finalized and will be released next week.
In The Black
Climbing out of what was once a $13.5 million budget hole, the city closed out FY07-08 with a $773,000 surplus, DeStefano said.
The hole started at $10 million and grew to $13.5 million when the final state budget was set. The city dug its way out with the help of several one-time revenues, including selling 55 Park St., Lot E and part of the former Coliseum lot all for private development. The city also earned $6 million by selling the city’s transfer station and setting up an independent authority to oversee the city’s trash.
The surplus will go into the city’s “rainy day fund,” the mayor said.
The city’s aggressive tax-collection practices appear to have paid off: The city sustained a 98.3 percent collection rate overall, with a 99.0 percent collection rate for real estate. The city also sustained its bond ratings: A3 by Moody’s and A- by both Standards & Poor’s and Fitch’s.
Click here to read the city’s full release summing up FY07-08.
Unlike last year, the mayor said this year he won’t be using one-time revenues to dig the city out of its budget hole.
Digging Out
The city passed its $456 million FY08-09 budget with a $6 million hole — a hole it expected to fill through union concessions.
The mayor announced Wednesday that the city has just struck three deals that will help fill that hole by adding an unexpected $1.2 million into city coffers (figures updated):
• Health Care: For the first time since 1984, the city negotiated its healthcare plan through a competitive bidding process. Budget Director Larry Rusconi said when he came to the city in 2006, he took a look at the budget and thought the competition would help cut costs. The method worked, he said: Six health care insurers answered the bid. The city ended up with the same company, Anthem, but because of the competition, it got a cheaper plan. The plan will save the city at least $300,000 in this fiscal year.
The plan covers 5,809 employees and 13,534 lives, according to budget staff. DeStefano said the contract took seven months to negotiate.
‚Ä¢ Energy: Taking advantage of new permission from the Board of Aldermen to enter into multi-year utility contracts, the city closed last week on a new, 3.5‑year contract to buy electricity. The contract locked the city into paying 8.15 cents per kilowatt hour. The rate is lower than what the city was paying in November 2006, and will save the city $2.5 million over the course of the contract, Rusconi said. Total savings this fiscal year should come out to about $500,000.
‚Ä¢ Waste: The rest of the savings — about $400,000, according to updated city figures — come from the city’s new municipal trash plan. Savings were earned when the city went out to bid for contracts for running the transfer station as well as hauling and disposing of solid waste.
• Retirement plan: The city saved about $750,000 when 27 of its employees took an early retirement plan, according to the mayor. (City unions have previously calculated that the plan saved over $1.3 million).
All the above leaves the city with a roughly $4 million deficit for FY08-09.
DeStefano said despite the tough financial times, the city will keep hiring for some positions. Since the fiscal year began, the city hired six new people, he said, including two bridge tenders (one for the soon-to-be-open Ferry Street Bridge), a director of labor relations, and a police chief and assistant police chief. The city still needs to hire some school nurses, he added.
DeStefano noted that efforts to cut city services — including closing the Stetson Library, the Whalley Avenue police substation, and the West River Senior Center — were wildly unpopular.
“Citizens have been protective of their services,” he said.
So the city is turning to the personnel side for further cuts.
Asked about the delay in balancing the budget — the city missed a Sept. 1 deadline and is now 10 weeks into the fiscal year — the mayor said the delay was in the effort to minimize impact on employees. He said he wanted to see how much could be saved by the health care, energy and waste contracts before calculating layoffs.
“I didn’t want to lay off anyone that we didn’t have to lay off,” the mayor said. “To rush would have been to lay off more people than needed.”
Reality Check: