Slow economy leaves city budget lagging

ALBUQUERQUE (KRQE) - A sluggish recovery doesn't just make it tough for Albuquerque residents, it also takes its toll on the city government's budget bottom line.

When Albuquerque city leaders passed the budget, the assumption was that revenue from the gross-receipts tax, effectively a sales tax, would be up 2.45 percent year over year.

But with four months of returns in for the current fiscal year, that tax revenue is actually down nearly a full percentage point, a story the Albuquerque Journal first reported Tuesday.

"We're not tracking where we'd hope to be," said Gerald Romero, the city's budget officer. "So we have some ground to make up."

A big part of the problem is consumer spending.

"When they don't buy things at the cash register, those dollars don't get back to the city for our general fund," said Albuquerque Mayor Richard J. Berry.

If the current trend continues, Albuquerque would have a $10 million budget shortfall for the fiscal year ending on June 30. City officials say they're equipped to weather that storm because of some extra cash from last year's budget and the ability to not fill vacant positions if necessary.

There are some other pressures on the budget though. Romero says Albuquerque's minimum-wage hike approved by voters will cost the city about $1 million in extra salary costs for city workers.

On top of that, a Public Employees Retirement Association plan the state Legislature is expected to take up in January to shore up public employee pensions would cost Albuquerque about $2.5 million.

It's not all bad news on the horizon. The first phase of overhauling the Paseo del Norte-Interstate 25 interchange also approved by voters should give the city's bottom line a boost.

"That'll be a $90-million-plus construction project that will bring some construction jobs," Romero said. "Then there's a multiplier effect in the local economy as those laborers get out and spend money locally."

A strong holiday season could also help the city, especially if shoppers spend locally.

"Until consumer spending returns, governments across the country have to make ends meet, and Albuquerque's no different," Berry said. "We'll make sure the trash keeps getting picked up and the grass gets mowed and that firefighters and police officers are on the streets."