Mayor Madeline Rogero and her staff at a Friday budget retreat with City Council outlined “tough decisions” due to steep fixed-cost increases for the 2014-15 fiscal year.
City officials detailed the City’s most recent accomplishments and proposed some strategic short-term investments aimed at protecting City infrastructure and leveraging private-sector partnerships in a way that will continue to grow the city’s revenue base.
However, costs for the City’s unfunded pension liability are projected to rise by $7.8 million next year – prompting the Mayor to tell Council members that she’s preparing two budget scenarios for 2014-15: One budget with 6 percent cuts, and another one that would maintain the city’s recent momentum.
“There will be a lot of tough decisions, weighing the citizens’ desire for City services, the need to continue to leverage private investment, and our legal obligations to pay the unfunded pension liability. We’ll be looking at all of our options.”
Finance Director Jim York said next year’s fixed increased costs will total about $11 million – $7.8 million more for pension fund debt, $2.2 million for cost-of-living adjustments, and about $1 million more in health care costs.
The City contributed $16 million to pensions this year; that amount is projected to rise to $23.8 million next year.
Mayor Rogero in 2012 pushed for Council- and voter-approved reforms of the existing City pension system, which will save taxpayers millions of dollars in pension benefits for future City workers. But the City remains obligated for existing liabilities under the previous pension plan.
The City ended the 2012-13 fiscal year with about $10.4 million in excess of projections. The one-time surplus is attributed to $8.6 million more in Hall Income Tax revenues than was projected, as well as other tax collections running higher than expected and efficiencies in operations.
Mayor Rogero is recommending that most of the one-time surplus – about $6.5 million – go to the General Fund balance.
The Mayor is proposing investing the remaining $3.9 million in critical deferred maintenance of City facilities and in public infrastructure that capitalizes on unique opportunities to strategically leverage private investment.
Such investments can pay long-term dividends: For example, the City’s ongoing $17 million investment in the Cumberland Avenue Corridor street redesign has already leveraged $130 million in private investments along the corridor.
Deferred maintenance and proposed public infrastructure projects include:
Repairs at four fire stations ($289,000)
Promenade Garage roof repairs ($350,000)
Streetscape upgrades and repairs for the 700 block of Gay Street ($870,000)
Henley Street and Clinch Avenue pedestrian bridge improvements, connecting Fort Sanders to Downtown ($950,000)
Central Street sidewalks at Depot Avenue ($200,000)
A traffic signal at Grand and 17th Street ($125,000)
Dale Avenue Streetscape at the Sansom Sports Complex ($500,000)
Marble Alley Streetscape and State Street improvements ($650,000)