Mayor Sylvester Turner’s proposed budget for the fiscal year that starts in July would close a shortfall of $114 million without employee layoffs by drawing down the city’s reserves, transferring money from special accounts to the general fund and cutting spending.
In a proposal unveiled Tuesday, Turner plans to spend $2.5 billion from the general fund, which is supported primarily by property and sales taxes and funds most core services, such as the police and fire departments, parks, libraries and trash pickup.
That is $83 million, or 3.5 percent, more than the current budget. The increase chiefly is driven by a $42 million increase in debt service, related mostly to the issuance last year of $1 billion in pension obligation bonds as part of the mayor’s pension reform package. Also driving the increase is $14 million in previously agreed to raises for police.
“This is a very, very tight budget,” Turner said. “I have scrubbed this budget, every line item that exists. I invite anyone to take a look underneath the hood. Because there are two departments that will always drive this budget: Police and fire.”
About 57 percent of the general fund, or $1.4 billion, goes to public safety – the police and fire departments, the municipal courts and emergency operations. Another $400 million goes to debt service. Parks, libraries, health services, trash pickup and most other city functions get the rest, about $672 million.
Turner acknowledged two key developments helped prevent layoffs in the proposed budget, providing most of the $84 million the mayor intends to pull from the city’s reserves to spend in the upcoming budget.
First, the city settled a lawsuit it had filed against Towers Watson, an actuarial firm it blamed for contributing to the city’s pension crisis, saying city officials’ reliance on the firm’s advice led them to boost benefits in 2001 and saddle taxpayers with unaffordable pensions costs. That settlement, which was approved by city council last month, injected $29 million into the general fund.
The city also, as it routinely does, conservatively estimated the sales tax revenues it would receive in the current budget year. As a result, the city collected an “extra” $28 million that will be available for the upcoming budget year.
Yeah, that pension projection lawsuit settlement sure came in handy. I don’t know what rabbits there will be to pull out of next year’s hat, however. We’ll see what Council makes of this when it comes to them for a vote.