Until spending improves for the long term to boost sales tax collections, Oklahoma City departments will be cutting budgets at a level unlike any seen before. Nonetheless, City Manager Jim Couch has proposed some options for discussion to Mayor Mick Cornett and City Council members. Said options include budget cuts across the board - to the tune of about 14% when all is said and done.
Budget Director Craig Freeman says reduction efforts as of this mid-fiscal year include, among several measures taken, each department being asked to shave 2% from its budgets.
"But a 2% midyear cut taken on positions really is almost doubled," he says, explaining the difference between position cuts and other budget cuts. "To some extent, it's really larger than 2% that we're taking midyear, if you look at it on an annualized basis."
In his report to City Council in early January, Freeman said some departments were able to make cuts in supplies and services without elimination of positions. However, 37 non-uniform positions were eliminated in FY 09-10. These include one position in the City Manager's office, five in Development Services, three in Finance, seven civilians in the Fire Department, one in General Services, three in the Municipal Counselor's office, six in Municipal Court, seven in Parks and Recreation, one in the Personnel Department, and three in Public Works.
In addition to the 37 eliminated positions, approximately 120 positions remain vacant, Freeman says.
FY 10-11 OUTLOOK
Discussions of an additional 12% budget cut for FY 10-11 is currently underway, as the general fund revenues are down. However, city leaders have until June to reach an agreement. The current revenue estimate is $321 million with an expense estimate of $347 million. This equals a $26 million shortfall that needs to be covered in FY 10-11 to balance the budget.
"We've had significant cuts in the past," Freeman says. "But I've been with the city for about 17 years, and ... as far as across the board, this is by far the worst I've seen. And I've talked to several people who have been here longer than I have who have said the same thing."
While no decisions have been made, "there are things we're looking at and potentially proposing," he says. In addition to all departments being asked to cut 12%, this includes no pay-plan increases, a reduction in the capital and contingency budget, eliminating EMSA support reserve, and a reduction in COTPA support due to additional grant revenue.
"When we talk about reducing capital out of the general fund, mostly it goes to facility improvements that are more like capital maintenance, like a roof replacement or a carpet replacement or fleet replacement for our general fleet," Freeman says.
Options for savings include health plan changes, reducing salaries, furlough days, no merit increases, and a change in shift schedules for police to help improve services without having to add positions. These, among others, are issues decided to be addressed in the Jan. 26 workshop.
"There are several things on the table. None of it has been formally proposed or approved, but we're looking at everything to try to do all that we can to manage within the resources we have and to try not to affect the services any more than we have to, because we know it's going to affect services," Freeman says.
SALES TAX WOES
A compilation of metro area sales tax collections by the Oklahoma Tax Commission shows several cities continue to see declines.
The January distribution of collections, primarily representing local tax receipts from November 2009 business, shows declines in six of seven metro area cities when compared to the same month last year. Those cities include Oklahoma City, Edmond, Norman, Midwest City, Chickasha and Guthrie.
This information was not yet available to include in the report presented by the Finance Committee to City Council in early January.
Oklahoma City's January distribution was $27,466,037, compared to $31,198,990 in January 2009, representing a 12% decline. This is the city's 11th consecutive decline in year-over-year collections, most of which were in the double digits.
Edmond experienced a 5.6% decline in year-over-year collections; Norman, 4.4%; Midwest City, 4.2%; Chickasha,18.6%; and Guthrie, 15.1%.
Moore's January distribution was $1,932,569, compared to $1,904,487 in January 2009, representing a 1.5% increase.
But even if sales tax collections improve dramatically prior to FY 10-11, the outlook isn't likely to change, Freeman says.
"If the miracle happened ... we would certainly make adjustments," he says. "But just the reality of how far it's gone down - December was our 10th consecutive month of decline on a one-year average. It has fallen so far, and it's tied into the economy so closely. It's like when you look at the economy beginning to recover, the pace at which jobs are added back or pay has been reduced and starts to get restored, and that's generally a very slow pace because businesses are real cautious proceeding out of recession to begin adding back.
"All that affects ... spending habits. So expecting that to come back quickly or to get right back to where it was, it would be nothing short of a miracle. So the reality is probably more likely with economic recovery: It's going to be a slow return."