What to do when city repairs are needed but the budget lacks the necessary cash flow? San Antonio has $15.3 million worth of street repair projects that need to be addressed, but lacks the funds to do it. How to deal with this budget quandary was the subject of yesterday's city council information “B” session. Management & Budget Director Peter Zanoni gave a presentation on the three options available â?? defer the $15.3 million in projects, implement up to $15.3 of $20.6 million in potential budget reduction alternatives, or a combination of the first two options.
After going through those options in detail, including where the potential cuts could come from, most of the council members stated a preference for the first option to defer the repairs.
“I cannot and will not support further cuts to the library system,” said Diane Cibrian. She noted that city funds were already deficient for the spay/neuter program, one of the potential cuts, to meet its 2012 no-kill goal. She suggested that council members should put together a list of streets that were in a high priority need of repair, but to otherwise defer such repairs.
“I personally cannot support any of these alternatives,” said Sheila McNeil.
Phillip Cortez and Mary Alice Cisneros were also for deferment, while Jennifer Ramos, Justin Rodriguez and John Clamp all voiced support for a 50/50 option to defer half the repairs and find roughly $7.5 million worth of budget items to cut.
Lourdes Galvan took this opportunity to stand up for her district. She's remained silent in defending her constituents from the toxic contamination from the former Kelly AFB, but she finds herself in a tight election battle with runoff challenger David Medina and spoke out for District 5 here.
“I cannot support deferring the street maintenance improvementâ?¦ District 5 cannot defer, we cannot wait any longer,” said Galvan, noting that she felt $1.4 million in street repairs are urgently needed.
“Somewhere along the line, we got dropped offâ?¦ and we have a lot of catching up to do,” said Galvan of her district.
But Mayor Phil Hardberger summarized the prevailing sentiment when he said, “the truth is 50/50 sounds good, but that's $7.5 million.” When the meeting ended, it certainly seemed like today's “A” session would end with a decision to defer the repairs.
The economic picture that Zanoni painted in yesterday's session was bleak. General Fund revenues are down 5.5 percent, or $49 million, and the projected shortfall for the General Fund in FY 2010 is $11.2 million. That $49 million shortfall is largely due to a $34.5 shortage from CPS payments to the city, due to a drop in revenues. There's also a project drop of $10.8 million in sales tax and $3.1 million in property tax. The forecast grew even worse when he noted that the projected budget shortfall for FY 2011 looks like $67.54 million.
“There really is no status quoâ?¦ to keep our current level of service to the community costs more,” noted City Manager Sheryl Scully.
Zanoni added that Moody's Investors Service had recently assigned a negative outlook to the U.S. local government tax-backed and related ratings sector. It's a historic rating, being that it's the first time the company has ever assigned such a negative outlook to this “large and diverse sector.” Zanoni said it reflects the significant fiscal challenges faced by local governments resulting from the housing market collapse, dislocations in financial markets and a recession broader and deeper than any recent downturn. Scully noted that it is a national outlook however, as opposed to one that specifies San Antonio per se.
Zanoni said the budget staff's recommendation would be to defer the $15.3 million ins street repair projects, although he noted that this would not affect the $21.7 million base budget for street maintenance in FY 2009. The length of that deferment wasn't totally clear. Zanoni noted that if revenues do not materialize over the remaining months of the fiscal year, that the projects would be completed first in FY 2010. He later estimated the deferment at about six months.
Zanoni then went over a complete list of the potential $20.6 million in “alternative reductions” that his department had identified after a request by the council. These included $2.7 million in expenditure savings, $5.2 million in improvement reductions, $2.1 million in base budget service delays and $10.6 million in base budget reductions. Reduction alternatives presented did not include any cuts for the police or fire department budgets, which comprise 57 percent of the general fund budget.
The expenditure saving possibilities included $200,000 in additional savings in Haven for Hope contracts due to a delay in the homeless shelter's opening and $700,000 saved in the municipal elections budget thanks to Julian Castro's decisive mayoral victory making a city-wide runoff unnecessary.
Other potential budget cut possibilities included reducing funds for free and low-cost spay/neuter services by $300,000; eliminating two filled animal care officer positions at $55,000; reducing the added summer youth employment program by $500,000; reducing graffiti abatement services by $65,000; reducing the books and library material budget by $500,000; reducing remaining sidewalk cleaning improvements by $279,000; eliminating a recreation center overnight pilot program at $125,000 and eliminating the Southside Lions Lake area restroom renovation at $125,000.
Base budget service delays suggested as possibilities included moving FY 2009 alley maintenance to FY 2010 at $850,000 and a five-year park maintenance and renovation program at $900,000. Potential base budget reductions included a 5 percent across-the-board reduction in non-public safety departments at $3.68 million; 10 percent in non-profit agency contracts at $1.27 million; other departmental reductions at $1.69 million and a travel budget freeze at $300,000.
There were times during Zanoni's presentation when there was so much hushed chatter going on that it felt like high school homeroom before the bell rings, making it seem like most in the room were just expecting the council to go ahead and defer. Any way you slice it, there's no easy answers out of this fiscal hole. The new mayor and city council will have their work cut out for them figuring out how to deal with the continuing budget shortfall projections.