Cincinnati City Council has basically one month to come up with a balanced general fund budget for the new fiscal year that starts July 1.
City administrators are now projecting a deficit for that spending plan of $77.9 to $96.8 million. Depending on the number, that could be better or worse than the $91 million projected earlier this month.
The University of Cincinnati's Economics Center predicts city income tax collection for the new fiscal year will drop between $41.5 and $60.4 million. Plus, other general fund revenue sources are expected to decrease by nearly $20 million.
City departments have been asked to look at what 25% budget reductions would look like for their agencies.
The city may also ask labor unions for "across-the-board changes to health care, wages and benefits." That will require negotiations with the labor unions.
Officials will also be reviewing all non-personnel spending.
The final income tax forecast from UC is expected to be delivered to City Council's Budget and Finance Committee on June 8. The city manager is scheduled to release his budget plan on June 11. The public will be able to make comments on June 16 and 18. Council is scheduled to act on the budget June 24.
So far, the city administration is proposing $31.6 million in budget reductions for FY21. Those include:
- Department reductions of $18.6 million, which includes eliminating vacant positions, billing back to restricted funds, and delaying police and fire recruit classes for FY21
- Across the board reductions of $4.7 million, including healthcare savings, freezing merit increases and cost-of-living adjustments for non-represented employees, and eliminating proposed new programs
- Shift human services funding of $4.8 million to Community Development Block Grant CARES stimulus allocation
- Eliminate future vacant positions in the amount of $3.5 million by offering an early retirement incentive program
- Avoid layoffs to maximum extent possible
And what about the options to deal with the remaining deficit of $46.2 to $65.1 million? Those proposals include:
- State or federal support within current CARES Act funding of an estimated $15 million, a reduction of $30 million due to language changes in the bill
- Monitoring any additional federal relief; however, this may not be known until September 2020
- Utilize secured borrowing for the difference to balance as a one-time use as a last resort. There is a 10-year repayment period.
- Any change to the revenue estimates could increase or decrease the gap. Revenue estimates assume businesses mostly return to normal during summer 2020
- Continuing to work through reduction scenarios
While trying to balance the FY21 budget, the city must also close a remaining $2 million gap in the current general fund budget. That number has decreased from a $15 million shortfall reported in April.
Budget and Finance Committee Chair David Mann said the report on the current fiscal year budget is "no small thing." He said not that long ago it wasn't clear how that gap would be closed.
"I'm grateful to everybody that has done so much," Mann said. "Not the least of whom are those who were furloughed and the human service agencies that took a hit."
The city has used a variety of measures to close the current budget gap. That includes temporary furloughs for some city workers, pay reductions for departments heads including the city manager and mayor, asking agencies who receive funding from the city to return part of it, and using state and federal grants to reimburse for some COVID-19-related expenses.