Denver Mayor Michael Hancock’s first budget holds little in the way of surprises. The tough medicine, and one of the first big tests of Hancock’s leadership, will likely come later this fall when a fiscal task force releases recommendations on addressing the city’s “structural deficit.”
Hancock proposes closing a $100 million shortfall in 2012 through about $62 million in reduced expenditures and about $38 million in revenue measures. Once passed, Denver will have closed shortfalls of about $446 million over the last four years.
In an open letter, Hancock said Denver is “doing a good job of weathering the storm.”
Having been stuck in that storm since 2008 makes this feel, as Chief Financial Officer Cary Kennedy said, like a “status quo” budget. But that doesn’t mean it is without pain.
Again this year the books are being balanced via a combination of, among other things, eliminated or vacant jobs (750 positions — though few, if any, layoffs are expected); furlough days (up to five); holding off on new police academy classes for a third straight year; and maintaining reduced hours at libraries and recreation centers.
The mayor is setting aside money to provide merit raises to Career Service Employees, but is wisely holding off on committing to spend it now in the event that the economy takes a turn for the worse. The city is also working to boost its reserves — from 10.5 percent to 10.8 percent of general fund expenditures — in hopes of returning to the 15 percent on hand before the downturn and the amount needed to maintain a AAA credit rating.
Hancock is taking baby steps to improve the business climate by eliminating a $50 fee required every two years of companies that pay the city’s Occupational Privilege Tax and by directing additional money toward business incentive agreements.
The budget keeps Denver on course. But there are clouds on the horizon.
In addressing the so-called “structural deficit” of about $30 million per year, the task force could recommend a variety of options that impact revenues — would you pay for recycling, for example, or favor creating a separate library district? Their report, due next month, is expected to consist of many price tags and several potential payment mechanisms.
That the mayor’s campaign promises about fiscal responsibility are reflected in his first budget leaves us optimistic about his guidance in that potentially more complicated financial endeavor.
