Denver Mayor John Hickenlooper must close a projected $70 million gap in next year’s budget, forcing another round of difficult decisions on top of the $56 million shortfall the city had to overcome this year.
The mayor recently asked the city’s department managers to come up with ways to reduce by 7 percent the city’s projected general operating expenditures of $950 million for next year and suggest new revenue sources.
City Council members, during their annual retreat Friday, speculated on what the city will end up doing.
Councilman Michael Hancock said the city needs to find ways to eliminate duplication in services. Councilman Chris Nevitt suggested a new tax could help defray the costs of the city’s parks and recreation system. Councilman Charlie Brown said the city may have to consider charging to pick up trash like nearby suburban communities do.
Council members on Friday learned the sobering news about next year’s budget from Ed Scholz, the mayor’s director of budget and management.
Scholz said the current budget situation is worse than when the mayor took office in the midst of a recession in 2003. He said the last time the city faced so many painful budget decisions was in the early 1980s.
“Light bulbs went off in the minds of a lot of people over the last two weeks,” he told the council. “People realized, ‘Wow, there’s no way for us to get over this without looking at programs and services.’ ”
The $70 million gap follows a year of cost-cutting by the city. In that time, the mayor enacted unpaid days off for city employees, dipped into reserves, and received contract concessions from firefighters and police.
The mayor also fired 11 sheriff’s deputies after their union refused to accept contract concessions, kept many positions vacant to help bring revenue in line with expenses and triggered more than 100 other budget-saving measures.
Projection flip-flops
The city originally had projected that revenues would increase by 3 percent this year; instead, the city expects revenue to decline by about 2 percent.
Scholz projected that the city’s revenues would improve slightly next year but by only 1.5 percent from this year’s collections. If the economy improves dramatically, that scenario could improve. But Scholz warned council members that despite recent signs of a recovering economy, it will take time for the city to see any tangible improvement in finances.
Scholz told council members that they also would become a part of the budget process and that he plans to meet with all of them individually to go over suggestions before next year’s budget is finalized.
No details until fall
The administration won’t release final details on a budget until September, and the council must give final approval.
Scholz said the administration is doing an inventory of all city programs to map any duplication in services. He also was certain new sources of revenue would be considered.
Councilwoman Jeanne Faatz warned the council to avoid enacting new taxes or fees, considering it had just approved a new district where any increase in property-tax and sales-tax revenue over the next 30 years would be used to help finance the renovation of Denver’s historic Union Station in LoDo.
Scholz said that in recent years, the city has struggled with a “structural deficit” in which revenue did not meet the normal growth in expenditures. This year’s downturn in the economy ended up exacerbating that situation, he said.
He said that over the past 30 years, sales-tax revenue, which makes up half of the city’s revenue, increased by an average of 7 percent annually. In the past 10 years, sales-tax revenue has increased an average of 3 percent annually. He said that in a typical year, the city sees expenditures increase by 4 percent to 5 percent.
Christopher N. Osher: 303-954-1747 or cosher@denverpost.com
