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Controller warns of $53M current-year gap; mayor—s office signals FY2010-11 deficit well north of $400M
Summary
City Controller Ben Rosenfield reported a first-quarter general fund shortfall driven by property-tax assessment appeals and payroll tax weakness, producing an estimated $53 million current-year gap. Mayor—s budget director Greg Wagner said the administration—s FY2010-11 preliminary deficit estimate (to be released the next day) will be well north of $400 million.
City Controller Ben Rosenfield told the Budget and Finance Committee on Nov. 18 that new data and department reports show a deteriorated fiscal position compared with the adopted budget. Rosenfield cited an estimated $35.5 million revenue weakness driven primarily by property-tax reassessment appeals and payroll-tax declines, plus about $9.6 million in departmental variances and $8 million in pending supplemental appropriations, producing a roughly $53 million gap for the current fiscal year.
Rosenfield said the city had received more than 4,000 assessment appeals as of the Sept. 15 filing deadline, representing about 20% of the city—s property tax base; his office—s model anticipates a larger average grant rate for current appeals (about 30% in aggregate) than seen in recent years, reflecting the changed market. "This projection is a forecast ... it's using the best information we have available today," Rosenfield said.
Payroll-tax weakness and a sharper-than-expected drop in employment and hours also contributed to the downward revision. Rosenfield noted a piece of good news in the hotel sector, where four months of growth suggested an "emerging bottom" in RevPAR after sharp declines earlier in the year.
Greg Wagner, the mayor—s budget director, told the committee the administration planned to release its projected FY2010-11 deficit the next day; he said the number will be "well north of $400,000,000." Wagner previewed that the mayor—s office will issue department targets and is likely to seek double-digit percentage reductions and other structural savings similar in magnitude to last year's measures; he emphasized vacancy review and other staffing strategies as part of the response.
Controllers and the mayor—s office said they would continue updating the board at the six- and nine-month marks and work with supervisors on options to close the gap.
