Phoenix to slash budget due to low tax revenue

Phoenix will make its largest budget cuts in history over the next several months as it copes with a precipitous decline in tax revenue that shows no signs of reversing.

The cuts, which City Manager Frank Fairbanks said would total more than $100 million, will touch almost every department in the city. Police, fire, parks and libraries could see cuts ranging from 15 percent to 60 percent.

The move comes less than four months after the city trimmed its general fund by 7.8 percent, or about $90 million, for the fiscal year that began July 1. Those cuts, which at the time represented a record reduction to the city's $1.2 billion general fund, easily will be eclipsed by the reductions for the 2009-10 budget, officials said.

"This state and the city are in uncharted waters," Mayor Phil Gordon said. "We're all working together to manage through this economic crisis that has been created in Washington, D.C. It's affecting all of us."

On Tuesday, the City Council will review a 164-page document that lists every program in the city paid for through the general fund. Council members will have two weeks to identify programs they think should be reduced or eliminated.

Department directors have submitted a list of suggested cuts to their departments totaling 30 percent. Phoenix's budget staff will use both sets of recommendations to craft next year's budget.

"The only things that we can cut are the things that we thought were too difficult to cut last year," Fairbanks said. "So these cuts are going to be difficult."

The council will have three basic options to reduce the budget:

• Increase the public-safety budget by $70 million, or about 9 percent, while cutting other departments 40 percent to 60 percent.

• Increase the public-safety budget by $10 million, or about 1.3 percent, while cutting the other departments by 25 percent to 45 percent.

• Cut the public-safety budget by $80 million, or 10 percent, while cutting other departments by 15 percent to 20 percent.

Fairbanks is recommending the second option.

The proposed budget will be released Jan. 6, followed by two weeks of community hearings. The cuts would go into effect March 2.

Over the past eight years, Phoenix has cut its budget six times, reducing its general fund by about 15 percent.

This year, the city reduced maintenance at city parks, cut city funding for festivals and parades and began charging fees at community centers. More than 1,000 positions have been eliminated in the past five years.

Phoenix began its budget process six months earlier than usual in the wake of plunging sales-tax revenues. City sales-tax collections were off 7 percent in July and 7.3 percent in August. September figures will be available Monday.