Tempe budget challenges 'unprecedented'

Tempe used a Jaws analogy to illustrate the massive economic shark it faces in budget waters troubled by the ripple effect of a tsunami-sized financial crisis on Wall Street and the city's tanking sales tax revenue and investment returns.

“The (economic) forecast information is telling us that the shark is a lot bigger than what our previous glimpses revealed,” City Manager Charlie Meyer wrote in his weekly update Friday. “We are going to need a bigger boat.”

Building that boat could involve Tempe facing the first layoffs in city history, Meyer said, but would help Tempe stay afloat as it manages an estimated $11.5 million budget deficit by the end of the 2008-09 fiscal year.

Meyer said he received a better understanding of the city's five-year financial forecast Thursday and updated the budget packet he provided the City Council that same day.

“We are experiencing unprecedented financial conditions,” he wrote.

Last month, the city predicted it would fall about $3 million to $7 million short in sales tax revenue by the end of the fiscal year, but Jerry Hart, Tempe's financial services manager, is now predicting that number will be closer to $5 million to $10 million in light of an estimated 9-percent sales tax revenue decline for July-October compared to the same period last year.

Meyer had suggested the city consider cutting the 104 jobs, at a savings of an estimated $9 million, to help Tempe manage its budget woes.

But Friday, he said, the revised budget packet included asking the council to consider cutting an additional 75 jobs next year.

Although Meyer had referred to layoffs as “a last-resort option,” on Friday he acknowledged that “it's not really feasible” to now imagine reaching the revised workforce reduction of nearly 180 jobs without layoffs.

Tempe has an estimated 1,800 full-time positions and as of last week about 63 of those positions were unfilled.

Meyer's budget suggestions also included depleting the city's $8 million rainy-day fund, continuing a hiring freeze, implementing a three-year salary freeze in 2009-10 and a possible reduction in pay beginning that same year.

While the City Council has said it will consider all of Meyer's budget ideas at a Dec. 1 budget workshop, some council members say they are far from approving layoffs that would affect city services.

“I'm not willing to accept that yet,” Councilman Joel Navarro said Monday. “I know we're in a bad situation… but we don't have a crystal ball. I'd like to look at what other things are on the table before I go there.”

Echoing Navarro's thoughts was Councilman Ben Arredondo, who called predicting layoffs “very premature.”

“I've been on the council 14 years. I've never had an area where we had to layoff anybody,” he said.

Navarro said he planned on meeting with Meyer to go over the budget update and ask for specific fiscal numbers that would justify layoffs.

Meyer has said his suggestions are subject to council approval but the sooner staff cuts are made the better position the city will be in to handle the economic downturn.