Tempe's budget shark looks bigger than expected

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 mean the first layoffs in city history to help Tempe stay afloat as it manages an estimated $11.5 million budget deficit by the end of fiscal year 2008-09 and an estimated $38 million deficit by the end of fiscal year 2009-10

"We are experiencing unprecedented financial conditions," Meyer wrote.

Last month, Tempe predicted it would fall $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, now predicts 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. But revised information Friday included an additional $8 million in salary and benefits cuts and cutting an additional 75 jobs next year, at an estimated $6 million savings.

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 a workforce reduction of nearly 180 jobs without layoffs.

Tempe has about 1,800 full-time positions. .

Meyer's budget-balancing ideas also included a staff reorganization, 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 the budget ideas at a Dec. 1 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 lay off anybody," he said.

Councilwoman Onnie Shekerjian said she still considers layoffs a "last resort" and that she is looking for suggestions inside and outside the city to help find efficiencies that would prevent them.

Meyer said budget measures are subject to council approval but the sooner staff cuts are made the longer the city's savings will last as Tempe manages what many economists expect to be an extended downturn.

"We haven't . . . hit bottom yet," he said.