Denver Mayor John Hickenlooper in a Tuesday letter to city employees warned that the city faces a $100 million budget deficit next year, $20 million higher than budget officials projected in April.
Sales-tax revenue has increased the past five reporting periods, but the same level of growth is not expected for the rest of the year, Hickenlooper wrote.
Other revenues, including the lodger’s tax and the occupational-privilege tax, also are growing more slowly than originally projected, the mayor said in the letter.
“The drop in expected revenue means we are faced with making deeper cuts in the 2011 budget,” the mayor said. “We know this hurts and is not easy for anyone. We have met the challenge of reducing the size of government in recent years, yet the demand for service by the public continues to grow.”
The projected 2011 gap follows last year’s belt tightening, during which the Hickenlooper administration closed a $160 million deficit to balance this year’s budget.
Total operating expenditures for next year, after closing the gap, are projected at $836 million.
Budget officials now are projecting revenue growth of 1.5 percent for 2011, compared with the 3.8 percent projected for 2010. Revenues for 2009 were down 6.5 percent from the year before.
A number of the measures used to balance the budget this year were one-time moves that won’t produce ongoing savings.
For instance, the mayor tapped $40 million in undesignated fund balance reserves to close the last gap. That leaves the city with about $132 million in three reserve categories, but using that money this time around could impact the city’s bond rating, increasing the cost to borrow money.
Hickenlooper also made targeted service reductions and revenue increases to close the last budget gap and forced safety workers to delay raises and non-safety workers to take unpaid furloughs.
This time around, the city has about 400 vacant positions it can eliminate or continue to hold open to help close the projected budget gap for 2011.
Other cities are taking far harsher measures. In Las Vegas, Mayor Oscar Goodman in March said that if he couldn’t get desired wage concession, the city should fire all city workers and offer to hire them to work a shorter work week.
The Denver City Council will meet in committee today to discuss the projected budget deficit for next year and to start reviewing budget plans for city agencies.
Hickenlooper said city departments will submit savings plans, which will be reviewed this month. He will present his budget to the City Council by mid-September.
“We are continuing with an approach of maintaining core services to Denver residents and minimizing impacts to employees,” the mayor said in his letter.
Councilman Charlie Brown said the city’s budget deficit means the council and all city agencies will have to engage in “shared sacrifice.”
“We’ve got to do budgeting by subtraction rather than addition,” Brown said. “That’s what it’s come to. In the old days, we added to the budget.”
Christopher N. Osher: 303-954-1747 or cosher@denverpost.com
