On April 1, 2019, the Keller Administration submitted its 2019-2020 fiscal year operating city budget to the Albuquerque City Council for review and budget hearings.
You can review the entire proposed budget here:
http://documents.cabq.gov/budget/fy-20-proposed-budget.pdf
The operating budget submitted if approved by the Albuquerque City Council is for $1.1 billion for the fiscal year that begins July 1, 2019.
The 2019-2020 budget represents an overall 11% increase in spending over the current year.
The proposed 2019-2020 budget is the first time in city history that the city operating budget will exceed the $1 Billion figure.
You can read Albuquerque Journal coverage here:
https://www.abqjournal.com/1299497/abq-budget-could-surpass-1-billion-for-the-first-time.html
Last year, the operating budget was $997 million.
The city council raised the gross receipts tax last year by three-eighths of 1% before the budget was even submitted.
Last years tax increase was implemented in order to deal with a projected deficit of $40 million, a deficit that never materialized.
Last year’s gross receipts tax increase generates $58 million per year.
Mayor Tim Keller signed off on the tax increase breaking his campaign promise not to raise taxes without a public vote.
The 2019-2020 proposed budget does not contain any proposed tax increases but does create new fees to generate revenue.
The new budget also contains a $34.3 million windfall with use of accounting “slide of hand” referred to by a city official as a “orphan month” windfall.
The $34.3 million from the “orphan month” will be used for one time expenditure’s.
Under the proposed budget submitted, the general fund, as opposed to the operating fund, is increased by $65 million to a grand total of $642 million.
2019-2020 CITY DEPARTMENT BUDGETS
The overwhelming majority of city hall government operation and services is funded by the general fund budget.
There are 26 major City Hall Departments.
Following is the 2019-2020 proposed budgets for each department:
Animal Welfare: $12,560,000
Aviation: $79,904,000
Chief Administrative Office: $2,094,000
City Support: $100,353,000
Civilian Police Oversight: $1,027,000
Council Services: $4,933,000
Cultural Services: $44,477,000
Economic Development: $5,938,000
Environmental Health: $8,693,000
Family and Community Services: $79,731,000
Finance and Administrative Svc: $70,145,000
Fire and Rescue: $97,894,000
Human Resources: $90,799,000
Legal: $6,324,000
Mayor’s Office Department: $1,070,000
Municipal Development: $61,687,000
Internal Audit: $976,000
Office of Inspector General: $405,000
Office of the City Clerk: $2,613,000
Parks and Recreation: $43,473,000
Planning Department: $16,772,000
Police: $209,852,000
Senior Affairs: $18,149,000
Solid Waste: $71,658,000
Technology & Innovation: $24,298,000
Transit: $51,551,000
Grand Total: $1,107,376,000
DEPARTMENT BUDGETS WITH THE HIGHEST BUDGET INCREASES
The City Departments that will have the highest increases in their budgets are:
Albuquerque Police Department, $16.5 million, TOTAL BUDGET: $205.4 million.
Albuquerque Fire Rescue, $9.6 million, TOTAL BUDGET: $97.8 million.
Family and Community Services, $7.4 million, TOTAL BUDGET: $79.7 million.
Municipal Development, $6.3 million, TOTAL BUDGET: $61.6 million.
MAJOR BUDGET HIGHLIGHTS
The Keller Administration announced the following major highlights to the budget submitted to the Albuquerque City Council:
PUBLIC SAFETY
47% of the General Fund expenditures fund the Police and Fire departments.
The 47% for public safety should not come as any surprise seeing as Albuquerque Police Department (APD) intends to spend $88 million dollars, over the next four-year period, with 32 million dollars of recurring expenditures, to hire 322 sworn officers and expand APD from 878 sworn police officers to 1,200 officers.
This years budget (2018-2019) had funding for 1,040 sworn police and at mid year APD had 920 sworn police.
The 2019-2020 budget call for funding of 1,050 sworn police.
APD is projecting that it will have 980 officers by this summer by growing the ranks with both new cadets and lateral hires from other departments, including APD retirees.
APD has recruited 59 sworn police officers as “lateral hires” from other law enforcement agencies in the State of New Mexico.
The budget provides for hiring more officers, fighting crime through community policing, enhanced addiction and mental illness services and Department of Justice compliance.
Full funding is provided to increase the Police Department by another 100 officers.
$6 million is budgeted for a public safety vehicle sustaining fund.
$1.7 million is budgeted to increase the number of sergeants to enable community policing.
$125,000 is budgeted for community risk reduction that AFR and APD developed jointly to help schools and businesses recognize weak areas in safety and conduct threat assessments for events like active shooters.
EXPENDITURES FOR SAFE NEIGHBORHOODS
The budget includes funding for streets, parks, transit systems and neighborhoods as follow:
$711,000 for the Addressing Dilapidated and Abandoned Property Team (ADAPT).
(NOTE: The Keller Administration has renamed the Safe City Strike Force as the Addressing Dilapidated and Abandoned Property Team (ADAPT) ).
$11.4 million is budgeted for the Animal Welfare Department, including spay and neuter vouchers and veterinary operations.
$158,995 is budgeted to enhance park security by adding security patrols to the City’s urban parks, in addition to cameras, lighting, fencing and other design features that are aimed at improving safety.
HOMELESSNESS AND SUBSTANCE ABUSE
Funding for homelessness and behavioral health includes the following:
$3.2 million more is budgeted to pay for year-round operation of the city’s Westside Emergency Housing Shelter West Side which until this year functioned only during the winter months.
$2 million of one-time money is budgeted for housing vouchers and related housing first programs.
$4.2 million is budgeted for affordable housing and $8.2 million for homeless services.
$6.9 million is budgeted for mental health, substance abuse, early intervention and prevention programs, domestic violence shelters and services, sexual assault services, and services for abused youth.
OUT-OF-SCHOOL OPPORTUNITIES FOR YOUTH
$1,000,000 is budgeted to fund more than 80,000 youth slots in summer and out-of-school programming.
$172,681 budgeted to keep every outdoor pool open until 8:00 p.m., seven days per week during the summer.
Full general fund support to the Head Start program is also provided for in the budget.
JOBS AND THE ECONOMY
$1 million is budgeted to create an innovative Increment of One Job Training program with CNM.
$2 million is budgeted to replenish the Local Economic Development Act fund.
$7.7 million is budgeted in Lodgers’ Tax funds for tourism and economic development.
NO NEW TAXES BUT NEW FEES
The 2019-2020 proposed budget contains no increases in the gross reciepts tax, but does contain new fees for essential services for those that use them.
The proposed 2019- 2020 budget includes a new emergency incident cost recovery fee.
The Albuquerque Fire and Rescue Department (AFRD) intends to bill a resident’s auto insurance company when it is dispatched to a call for service to the scene of a car crash or vehicle fire.
This will be the first time AFRD will be billing for services to the scene of a car crash or vehicle fire and the billing is expected to yield $1 million and fund 12 new firefighting positions.
The 2019-2019 budget proposal includes increasing the inspection fee AFRD charges as part of the business registration process.
Inspection fees for business registration varies by square footage.
Under the new inspection fee structure, some businesses will see no hike and perhaps even a reduction in the fee.
Businesses between 1,501 and 3,000 square feet would pay $100 compared to $60 now paid.
The proposed budget also increases the fee Solid Waste charges for tire recycling.
“ORPHAN MONTH” WINDFALL CLAIMED
The City’s Chief Financial Officer (CFO) Sanjay Bhaka revealed that the city is covering some of the budget increases with gross receipts and property tax revenue created by an accounting policy change.
The fiscal year runs July 1 to June 30, but the city has traditionally applied June’s taxes to the following fiscal year because they do not arrive until August.
CFO Bhaka referred to applying June’s revenues to the following year with the revenues received in August as an “orphan month”.
The accounting policy shift will now extend the window in which the city can recognize the revenue and the accounting reset results in an extra $34.3 million in revenues.
According to CFO Bhakta, the accounting policy change is a “correction” of current practices and it aligns the city finances and accounting practices with state government financing and nearly all other governmental entities around the country.
The $34.3 million according CFO Bhakta is a “one-time, lifetime” boost in revenues that the city cannot apply toward recurring costs.
$29 million of the $34.3 million will be applied to numerous one-time investments the Keller Administration feels are important.
One-time investments include:
$6 million for public safety vehicles such as police cars for new police cadets.
$2.3 million for park security.
$2 million for the business recruitment and growth.
$2 million for housing vouchers and related programs.
https://www.abqjournal.com/1299497/abq-budget-could-surpass-1-billion-for-the-first-time.html
ANALYSIS AND COMMENTARY
Anyone with a Bachelor of Business Administration degree with a Major in finance, and who has taken college accounting and finances courses, probably cannot ever recall the accounting term “orphan month”.
Notwithstanding the City’s external audit firm giving its blessing in the change in accounting and reporting practices, the Keller Administration is playing “hocus pocus” with city finances proclaiming an “orphan month windfall” of $34.3 million in order to create essentially a “slush fund” to pay for onetime projects the Keller Administration wants to fund.
What the Keller Administration is in fact doing is basing the current City’s proposed budget on 13 months of revenue rather than the traditional 12 months, and it’s a dangerous practice.
The City relies on gross receipts tax revenues that are collected by the state and then distributed to the city.
Gross receipt tax revenues tend to “eb and flow” depending on the overall economy of the state, and when revenues do not come in as projected, deficits occur, as what happened last year that resulted in a tax increase.
Further, last years tax increase generates $58 million more a year, so its difficult to understand why the city now feels the need to rely on an “orphan month” for $34 million in additional revenue and increasing fees to balance the budget.
The $34.3 million according CFO Bhakta is a “one-time, lifetime” boost in revenues that the city cannot apply toward recurring costs.
Instead of being responsible with the “windfall” the Keller Administration decides to just spend the money and not place it into “reserves” for future needs and until the New Mexico State Auditor can render an opinion on the the change in accounting practices.
State Auditor Tim Keller established a reputation of honesty and integrity by uncovering all sorts of “waste, fraud and abuse” in the use of taxpayer money.
When Keller was elected Mayor, he brought with him CFO Sanjay Bhaka as well as now Chief Administrative Officer Sarita Nair from the State Auditor’s Office, and all three should know better.
The New Mexico State Auditors Office conducts mandatory audits of the City of Albuquerque.
Least anyone forget, New Mexico State Auditor Tim Keller was the one who found the backlog of 4,000 rape kits, not to mention the city spending more on civil lawsuit settlements that was considered reasonable all of which got Keller plenty of news coverage as he was running for Mayor.
Absent from the Keller Administration is any announcement if the current State Auditor Brian Colon’s office has given the approval of the city’s new accounting practices and the use of an “orphan month” revenue to free up $34 million in revenues.
The Albuquerque Fire and Rescue Department (AFRD) billing a resident’s auto insurance company when it is dispatched to a call for service to the scene of a car crash or vehicle fires in order to raise $1 million and fund 12 firefighter positions borders on the grotesque.
It is difficult to understand how that $1 million in a $1.1 Billion-dollar budget cannot be found to deliver a basic essential service to a car crash or vehicle fire to assist.
A very large percentage of people do not carry car insurance, and those who do, the insurance carrier may deduct the charge from an insurance claim.
The city maintains a contract with numerous private wrecking companies that are on a rotating schedule, when the city could easily purchase “tow-trucks” and do the job to clean up crash scenes.
And if there is a fatality, and no insurance, the City will probably want to charge the decedent’s family for the call for service which can easily be in the thousands of dollars.
This is not the first time city hall has gotten the “bright idea” to start charging citizens for essential services that they have already paid taxes for, but last time it was police services.
In 2017, Albuquerque City Councilor Pat Davis lead the charge with the introduction of a city council resolution that would allow the private sector and the businesses community to partner with the Albuquerque Police Department (APD) to create specific crime plans for business areas.
The Davis plan was that if you can afford to pay more for your law enforcement protection services that you have already payed taxes for, the City would divert more law enforcement resources for protection to your area.
AFRD increasing charges as part of the business registration process is also highly questionable as being needed given last years increase in taxes and revenues.
Over the next few weeks, the Albuquerque City Council “Committee of the Whole”, consisting of all 9 city councilors, will hold budget hearings on each department budget and alter or amend the budget as they see fit, vote to approve and the budget will take effect July 1, 2019.
Perhaps the City Council can find responsible custodian to adopt the “orphan month” windfall and reject the change in accounting practices.