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For months, Santa Fe officials have warned of a $100 million budget shortfall that has to be corrected by July 31—the deadline by which the city must present the state with a balanced budget for the current fiscal year. The city had said budget hearings to debate what to cut and what to keep would begin this week, but postponed the first one to July 20 with a governing body vote on July 29. See the most recent schedule provided to SFR here.
In the meantime, Finance Committee Chairman and City Councilor Roman "Tiger" Abeyta spoke to SFR about what to expect. This interview has been edited for clarity and length.
SFR: How did the city arrive at the $100 million estimated shortfall? I’m wondering if you could explain just a little bit about where this number comes from.
Roman Abeyta: First of all, the total operating budget for the city last year was approximately $377 million. And so that includes all funds, which come from different revenue sources such as fees, fines, lodgers tax, etc. …Staff looked at all revenue sources individually to determine how they're going to be impacted, and came up with a total of $100 million in shortfall. Obviously the greatest concern was that the gross receipts tax—which makes up 30% of revenues—would take a huge drop in March and April when everything was shut down except for grocery stores.
A lot has changed since the city first announced that projection. Is $100 million still an accurate number? That would mean the city has to cut almost a third of its budget.
Well, remember a lot of the revenues don't come in till 60 days later, so there's always a lag where we are missing the last two months of data… Initially we expected GRT to drop by 25 to 30%. But the April numbers show that it was actually closer to a 19% drop. We expect to get another number when we go into the budget hearings, and I don't think we're going to see a $100 million deficit based on what we saw in April. But we're still going to see a significant deficit, just that maybe we're looking at $70 to 80 million as opposed to $100 million, so there's going to be an adjustment…This is going to be a unique year in that we are going to have to continue to readjust the budget throughout the year because with COVID-19 we have no idea what's going to happen.
What’s going to happen in the budget hearings?
It is the mayor's responsibility to submit to the Finance Committee a balanced budget for us to approve. But within that, he's going to have to explain to us how he balanced it, department by department. And then as a Finance Committee, we will decide whether or not we agree with the way he's balanced the budget and make adjustments, and then we present a balanced budget to the governing body for the final discussion and vote.
What are some of the strategies that will be presented for closing that budget hole?
Is the mayor going to use some of our cash reserves to plug that deficit? Is there going to be any reduction in the workforce? Will we continue the hiring freeze? How is that going to impact services and departments? These are all strategies we will weigh in on. Each department has also been looking at their own internal budgets and where they can make cuts without impacting services as much as possible.
Will we see a significant reduction in services? Will you actually have to make choices about which rec centers and libraries to close?
Again it will depend on the projected deficit, if it's $100 million, then most definitely…If it's $70 to 80 million, then probably still, but maybe not as drastic.
Where does the issue of equity play into this and into how you decide where to make cuts, or which facilities to keep open when some members of the community have been hit much harder by COVID-19 than others?
I mean let's take libraries, for example, I don't think you can treat the Southside library the same as you do the other library because of the impact…The other thing we need to take into consideration is what's going to happen with the schools when they open up—what are we going to do to address the children and families that live on the Southside and don't have access to Wi-Fi? So yeah, absolutely we will be weighing these issues.
In the past the mayor has said he would not make significant cuts to public safety budgets. Do you think that has changed?
We're getting a lot of questions and a lot of emails regarding the funding of the police…What functions the police department serves and what de-funding would mean? Can we have the police department maybe collaborate with other departments to create more community type of policing?…I think what we're going to see from the mayor is much more conversation about this issue.