Santa Fe is facing its largest ever budget shortfall, and it's clear that city programs and services will take some drastic cuts in the COVID-19 pandemic's aftermath. But without any clear signals from Mayor Alan Webber's administration about where those cuts might come from, it seems that anything and everything is on the block.
On Monday, city officials announced an expected budget deficit of at least $100 million for fiscal year 2021, which begins July 1.
It's "the worst budget shortfall in our history," Finance Director Mary McCoy wrote in a memo sent to the governing body, telling city councilors and the mayor that economic fallout from stay-at-home orders has catapulted the city into an "unprecedented financial crisis."
The shortfall represents a 30% drop in revenues into all funds, she said during a news conference earlier Monday. The general fund—expecting a gap of $31 million for fiscal year 2021—has been particularly hard hit by the drop in gross receipts taxes as business ground to a halt for much of the last two months.
Many businesses will reopen as Gov. Michelle Lujan Grisham's orders are lifted, but revenues are expected to recover more slowly. The city's estimates are based on a calculation of when, how and at what capacity businesses will reopen, said the mayor.
The drop in GRT could also impact the city's bond rating, McCoy said, making it more expensive to take out loans. New Mexico faces a $1.7 billion to $2.4 billion drop in revenues, which she expects will cause capital outlay funds and other funding from the state to dry up in the coming year.
Lawmakers are planning a special session to remake the state budget this summer.
Webber said the city will begin looking for cuts department by department, and will also look at spending reductions across departments to make city programs more efficient and eliminate redundancies while still providing essential services to residents. This cross-departmental discussion will be overseen by three committees in June—Public Works and Utilities, Finance and the newly created Quality of Life Committee—before a final list of recommendations is presented in budget hearings in July.
The city is still hoping to receive assistance from the federal government as well. On Friday, the US House of Representatives passed the HEROES Act, an aid package that includes relief money for small cities. If passed by the Senate, Santa Fe could receive between $14 and $20 million. But even that would hardly be enough to stall the major changes that will be necessary.
In April, the city furloughed workers across all departments as one of several strategies to close the anticipated $46 million gap in the 2020 budget. Those furloughs resulted in less than $2 million in savings. Webber did not say how many of the staff changes will become permanent layoffs in order to meet the 2021 budget deficit or what other strategies the city is planning to employ in order to deal with the sudden shortfall.
"There is no plan right now because the budget is a plan," Webber said. "And we're going to create the plan collaboratively with the entire governing body and the participation of the department heads and with the input of residents on what they believe are the priorities that the city ought to use our resources to address."
The city was quick to begin seeking input from residents with a survey released online Tuesday asking Santa Feans to help "re-imagine how we do business and where we focus priorities after COVID-19 and moving forward."
The survey asks respondents to rank the importance of city spending within categories such as infrastructure, community services and economic development. Some questions ask for respondents to pick between equally grim alternatives that paint a picture of what could be in store for the city in the coming months and years.
If the city had to close some facilities, one question asks, would you prefer to close all libraries and keep recreation facilities open or close all recreation facilities in order to keep the libraries up and running? Or just keep some rec centers and some libraries open?
McCoy said she expects full recovery from the economic downturn caused by COVID-19 to take five to six years. In the short term, Webber said the speed with which the city is able to recovery economically will depend on how the public health crisis continues to unfold and Santa Fe's own ability to keep the virus at bay and attract visitors back to the city.
Take the survey at: https://bit.ly/2AE5EUs