The nearly $100 million dollar projected shortfall is a result of several factors, including lower sales tax revenues, higher city healthcare costs and increased pension obligations.
That’s what the city faces for fiscal year 2011 and that doesn’t take into account the budget gap for fiscal year 2010.
Houston Controller Ron Green says it’s still unclear exactly how much of a gap there will be.
“We’re projecting about a anywhere from a $12-20 million gap. So there are some serious issues that have to be addressed, but we still have to stick to our level of service that we deliver and I think that’s the undergirdment of what decisions will be made.”
Among those decisions is the possibility of city layoffs. Mayor Parker says layoffs are absolutely the last thing she wants to do, but she is not ruling them out.
“If our employees’ groups will work with me to perhaps delay some of the statutory increases, we may be able to save jobs. If we go a different route and decide that there are services that we provide that are unnecessary — something that I don’t know today, maybe it’s something we don’t need to provide, maybe it’s something that should be privatized — that may have an impact on employees.”
Parker sent a memo to councilmembers, listing possible options to close this year’s budget gap and address the staggering $100 million shortfall next year. Personnel cuts, dipping into the Rainy Day Fund, mandatory employee furloughs and the consolidation of city departments are among the alternatives.
Parker says if the city does not address the budget situation by implementing some combination of those strategies, the only remaining option is to raise taxes.
“We of course always have the opportunity to go back to the taxpayers for more money. It is not my intention to do that and that’s why that was not listed as one of the options. Because the problem is for years now we have spent more money than we have taken in. This is not something that’s different for the city than it is for the average individual out there, you can’t spend more than you earn.”
The city is also in negotiations with the employees’ union as well as the police and fire unions to talk about deferring pay raises until fiscal year 2012.
Parker says final budget recommendations will take place in April with a deadline to present a proposed budget to council and the public on May 12th.