The city of Richmond’s budget deficit for next fiscal year has grown from about $9 million to about $11 million as the result of various cost increases, a budget expert told City Council Tuesday.
Following up on his five-year budget forecast from December, public finance expert Russ Branson said if the city does nothing to remedy its budget problems it will face a $31.8 million shortfall by 2021, up from $22.7 million in his December report.
A $15 million increase in various costs from this fiscal year to next — including increases in city employee salaries, health benefits and pension costs — contributed to the $11 million deficit for fiscal year 2016-17, said Branson in representing the National Resource Network, a program assisting cities with ongoing financial challenges.
Starting with next week’s council meeting, City Manager Bill Lindsay said he will begin making recommendations on how to close the deficit. The cuts will inevitably result in a reduction of city services, Branson said.
Branson did not recommend layoffs, suggesting other ways to reduce $5 million in personnel costs. The city, he said, should attempt to gain concessions from its unions, eliminate vacant positions, reduce police and fire overtime, and do a better job of recovering more of the fees owed to the city for such things as construction permits. He recommended another $3 million in non-personnel cost reductions, including using fewer contractors to complete jobs and reducing city vehicle expenses.
Mayor Tom Butt, who has proposed a number of tax and fee revenue measures to deal with the longterm deficit, said the budget shortfall has placed Richmond and its council “between a rock and two hard places.” The shortfall is coming at the same time as residents are complaining about shoddy roads, overgrown street medians, an increasing homicide rate and an inadequate number of youth programs, Butt said.
“Then I get complaints from the unions who are concerned that we’re not building in cost of living increases for them and so forth,” the mayor said. “I get complaints from the budget hawks, the people who are disappointed that Measure U didn’t pave their streets and so forth. Everybody’s got a complaint, nobody’s got a solution.”
Councilmembers Vinay Pimple and Nat Bates, who have been calling for an audit on city spending, also expressed frustration.
Not all councilmembers were as concerned. Councilmember Gayle McLaughlin, one of three Richmond Progressive Alliance (RPA) members on council, said she trusts the City Manager will find creative ways to provide solutions to avoid layoffs.
“I don’t think the panic button should be pressed by any means,” McLaughlin said.
Gaining concessions from unions will likely have political implications. After all, RPA members who make up a near-majority on council listed SEIU Local 1021, which represents city employees, as a major supporter in their last campaign elections.
Council has until July 1 to adopt next fiscal year’s budget.
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