The March 2, 2018 Albuquerque Journal front page blaring head line reads “Mayor may support tax hike without vote; The City is estimating a $39 million to $40 million deficit for the coming fiscal year, which starts July 1.”
When you pull up the same story on the Journal’s’ internet web site, the headline is “Mayor fears taxes will have to increase”.
There is a big difference between going against a promise not to raise taxes without a public vote and reporting a fear that taxes may have to be raised.
I suspect that there is a major age difference in the age of subscribers who get the Albuquerque Journal delivered to their homes versus a much younger age group who read the Journal online.
The story delved partially into the breakdown of the factors contributing to the deficit and include:
1. $25 million representing the gap between projected revenue and baseline budget expenditures.
2. $4 million for the increased costs of training of police and policy changes associated with the Department of Justice settlement agreement.
3. $3 million of increased costs associated with the self-insurance fund and more premiums needed for workers compensation and tort claims
4. $6.2 million for the increases in health insurance premiums
5. $2.1 million for an increase in water rates by the Bernalillo County and Albuquerque Water Authority
The news for the need of a tax increase should come as no surprise to anyone, and neither should the headline.
What is noteworthy is Keller, along with two of his staff, met with the Albuquerque Journal editors in private to discuss his plans.
The headline in the Albuquerque Journal that the Mayor is going back on his promise to have a public vote is politically damaging and should also come as absolutely no surprise coming from the Albuquerque Journal given its Republican leanings and anti-tax sentiment.
The Journal headline is a clear message to Keller that they are watching him closely and now we can wait for the editorial.
OTHER CONTRIBUTING FACTORS TO CITY’S DEFICITS
The City is facing a $6 million deficit for this year and $40 million-dollar deficit for the next fiscal year.
There will be a need for $69 million for the ART Bus project that must be found if the federal grant is not forthcoming.
$40 million is needed for an upgrade of the emergency operations center and communications center.
There is a need for funding for 350 more police officers that the Mayor and city council want and have promised in order to get to the 1,200 level.
There is a need for replacement of the roughly 20% of police units and fire department units that is the average rate of replacement of older vehicles, not to mention
$25 million dollars is needed in continuing revenue funding to offset and makeup for the lost revenue from the state with the repeal of the hold harmless provision.
There is also a need to generate revenues to address all the other city departments, vacancies and increases in salaries to those other city employees who have been given significantly less in salary increases, or no increases at all, for the last eight years while APD’s budget and salaries increased.
BREAKING A PROMISE NO SURPRISE
Mayor Keller backtracking on his promise to have a public vote on tax increases should come as no surprise and there were early warning signs of it.
On February 24, 2017, Keller held a press conference announcing the city is facing a $40 million deficit.
(February 24, 2018 Albuquerque Journal, page A-7, “Mayor Keller says Albuquerque facing $40 million deficit; Crime, health care, reduced state funding, DOJ settlement cited)
In announcing the deficit in February, Mayor Keller said:
“Between rising crime, increasing health care costs, and the drying up of tens of millions in state funding, the chickens are coming home to roost … It has become clear we are faced with a choice: own up to the financial reality at city hall, or continue to muddle along and risk years of uncertainty about the resources that are required to bring real help for public safety to protect our kids”.
The February 24, 2018 press conference was the second one done by Keller on the $40 million deficit in eight weeks.
Most of what Keller said has also been said by the City Council.
KELLER’S “GOLDEN OLDIES” ON NO TAXES
Over a year ago on February 14, 2017 the mandatory state audit of the city was released by then State Auditor Tim Keller, and he said Albuquerque needed to substantially increase funding for the risk management fund to $6.3 million a year to cover the shortfall.
“The city is basically spending more than it can afford for settlements for police shootings and civil rights violations. … That’s obviously a financial problem, which is why it shows up in our audit” Keller said at the time.
“In light of the city’s troubling trend of incurring more liabilities, it is appropriate and necessary for the city to better fund the (risk management fund),” Keller told the city.
On the campaign trail, Mayoral candidate Tim Keller said he would raise taxes as a last resort for public safety but only with voter approval.
Candidate Keller said he would draw from various agencies, departments and programs where large, misappropriated budgets existed to deal with any city deficit.
What candidate Keller said about “misappropriate budgets” sounded fantastic but not very realistic after the 8 years of budget cuts and downsizing of government by his predecessor.
On December 19, 2017, soon after being sworn in, Mayor Tim Keller reported that the city was facing a $6 million-dollar short fall this fiscal year that would have to be made up somehow.
Among the contributing factors for the $6 million deficit was the Albuquerque Police Department exceeding its overtime budget by $4 million by going from $9 million to $13 million and the excessive judgements paid out in APD deadly use of force cases such as the $5 million settlement paid in the Mary Hawkes case.
Further, Mayor Keller announced the that the city was facing a whopping $40 million-dollar budget short fall the city will be dealing with next fiscal year.
During the December 19, 2017 press conference, Mayor Keller said:
“Because we have a deficit situation, we are really going to have to focus on prioritizing what is important this year for our city. … A piece of that is also understanding we’ve got to find ways to step up for our officers, and we also have to prioritize job creation and keep our kids at the forefront of the budget process this year.”
Asked during his press December 19, 2017 press conference if a tax increase would be required, Mayor Keller said:
“I certainly hope not, and I can’t imagine that at the end of the day, given what we want to prioritize, that is going to happen. The tougher question is how do we actually get more officers on the streets, and we’re going to be working with our police chief and the City Council to find a way to do that.”
(See December 19, 2017 Albuquerque Journal “Mayor: APD still a priority despite projected deficit).
THE CITY COUNCIL’S SONG AND DANCE ON TAX INCREASES
On February 17, 2018, City Councilors Ken Sanchez and Trudy Jones announced that the city council will consider a tax increase saying the city was facing a budget shortfall and that the city needed more cops.
(See February 17, 2018 Albuquerque Journal, “City Council to consider tax hike; Councilors say city facing budget shortfall, needs more officers)
In announcing the City Council’s proposed tax increase, City council President Ken Sanchez had his own version of the same song sung by Mayor Keller when he said:
“We are at an extremely critical time. … Just this coming fiscal year, we are facing a $40 million shortfall. … Our police department staffing is facing some major deficiencies” and saying Albuquerque Police Department has around 850 officers and that 1,200 are needed.
Sanchez also pointed out that the city has lost $25 million in revenue due to the state’s “hold harmless” agreement.
After the legislature did away with state taxes on food and medicine in 2005, it agreed to pay local governments “hold harmless” money to ease the burden of the lost revenue with the money tapering off since 2016.
The New Mexico Legislature allowed municipalities to impose a three-eighths percent gross receipts tax without a public vote, to make up for those losses from the hold harmless provision, which is what City Councilors Sanchez and Joes are proposing.
The gross receipts tax proposed of three eights of a cent and could potentially raise $22 million and upwards of $55 million.
The overwhelming majority of the $55 million generated by the tax being proposed by the City Council will in all probability have to be applied to the $40 million-dollar projected deficit and other incurred debts.
For the last eight (8) years, the Albuquerque City Council strongly resisted raising the gross receipts tax at all costs despite the effect that budget cuts were having a severe impact on essential services and a disastrous effect on public safety.
For the last eight (8) years, there has been a severe downsizing of city hall personnel, the elimination of numerous positions, and no or very little raises for city hall employees and even a time when pay was cut to make up for deficits to avoid any kind of tax increase.
Mayor Tim Keller is due to announce his first budget on April 1, 2018 which will then be enacted by the city council effective July 1, 2018 after city council budget hearing.
The city council will have a full three months to have budget hearings and to allow for public input and comment before enactment of the budget that will be effective July 1, 2018 when the new fiscal year begins.
If Mayor Keller feels we need a public safety tax for police and the DOJ reforms and deal with the $40 million deficit and lost revenues he should advocate its enactment by the City Council when he releases his first budget on April 1, 2018.
There is a need for consensus building with public input on any tax increase.
It is the City Council and only the City Council that can enact a tax increase.
The City Council is required to have public hearings on the proposed budget and allow for public input.
The public’s input is vital in order to reach a consensus on the need for any tax increase.
Let the city council do its job and decide on any proposed tax increase, theirs or the Mayor’s.