Denver Mayor John Hickenlooper on Wednesday outlined plans to close a $100 million gap in the 2011 budget but also stressed that now may be the time to start talking about overhauling how revenue is raised to put the city on sounder footing in the future.
Layoffs and furlough days for city employees and pay freezes for Hickenlooper’s Cabinet and the City Council are among the measures being presented by the mayor as part of a plan to plug next year’s shortfall.
Other measures include steeper fines for red-light runners and speeders and reduced library hours.
Under an earlier agreement, the city’s police officers will delay their negotiated pay raises of 3 percent to December 2011 instead of getting those raises in January as is normally done. Firefighters also previously agreed to delay their raises.
The mayor also will abolish 158 positions in the city’s workforce, about 38 of which will be done through layoffs.
“These guys have done a great job of pushing down into the bureaucracy,” Hickenlooper said of his budget staff. “Everyone is thinking, ‘I don’t want to have my neighbor laid off. How do we save? How do we do?’ “
But after three years of budget slashing to overcome a combined total of more than $364 million in deficits, roughly 13 percent of expenditures, the mayor now is wondering whether he and other civic leaders should consider putting before the voters an overhaul of how the city finances itself.
In a meeting with the editorial board of The Denver Post, he said that even after revenues return to more normal levels, Internet retailing will continue to take a toll on sales-tax revenue, which finances roughly half of the city budget. He added that cellphone transmissions are taxed at a lower rate than the land lines they are replacing.
“Maybe it is our time to lay it out and have that discussion,” Hickenlooper said, adding that he recently brought the issue up with Roxane White, his chief of staff, and Claude Pumilia, the city’s chief financial officer.
Hickenlooper said a task force of civic leaders could study the issue and suggest a new revenue system voters could consider as early as next spring during the upcoming mayoral election.
On the table could be getting rid of the city’s occupational privilege tax, or so-called head tax business owners pay based on the number of people they employ, in exchange for new revenue sources that will be more “predictable and stable,” Hickenlooper said. He said surveys show that residents have more trust in city government now than when he took office, making it more likely the public would be receptive.
“We’re getting to the point where people believe in us,” Hickenlooper said. “They don’t think that we’re hiding things, and they don’t think we’re doing things in a fakey way. And they think we’re genuinely out there trying to make the government work. I think we’re getting to that point where we’ve cut enough, and we have enough credibility that we can lay out some bona fide proposals.”
To help close next year’s budget gap, the mayor also will tap $9 million in reserves, leaving an undesignated general fund balance of about $94 million, or about 10.5 percent of expenditures.
City policy advises the balance should not dip below 10 percent of expenditures and strives to keep that balance at around 15 percent of expenditures in normal economic times, or $135 million.
Non-safety city workers will see merit raises averaging 2.2 percent next year, but they will see their health care premiums increase an average of 7 percent and they also will have to pay an extra 1 percent toward their retirement plans. They also will have to take five unpaid furlough days.
General-fund operating expenditures are projected to jump 4.1 percent in 2011, up to $896.6 million.
The rest of the gap will be closed with efficiencies and savings of $52 million and revenue increases of $39 million, the mayor said.
Much of the new revenue includes the one-time use of $17.8 million in excess fire pension mill-levy funds, which will finance new-hire pension costs and other existing fire operational needs.
Hickenlooper also will raise traffic fines to match the Denver-area average and will eliminate an early payment discount on traffic fines. The traffic fine changes were the only fines the mayor decided to hike.
Christopher N. Osher: 303-954-1747 or cosher@denverpost.com
