St. Paul Mayor Melvin Carter has sought to balance the 2021 city budget without laying off city staff, increasing the city property tax levy or dipping into emergency reserves.
The result? An austere budget proposal that will weigh heavily on virtually every city department and many city services.
If Carter’s proposal is approved, the city would lose the equivalent of 93 workers — or 78 full-time city employees, as well as 15 employees from library services — mostly by keeping vacant positions unfilled. Carter has said he plans to avoid lay-offs.
Carter, who unveiled his 2021 budget proposal on Aug. 20, delivered a library budget address Friday that calls for $1.4 million in library cuts, including snipping 17 open positions, even as libraries begin to reopen for quick visits.
“This budget proposal will result in significant pain points,” Carter said. “First, we have to rethink all of our core business models. Second, we must prioritize the quality of life in our neighborhoods.”
Despite cuts, the mayor said the library budget will fund cultural liaisons, virtual storytime, electronic library cards for all St. Paul Public School students and the expanded availability of mobile WiFi hotspots.
MORE DETAILS ON BUDGET PROPOSAL
Susan Earle, budget manager with the Office of Financial Services, outlined other potential changes in a budget overview presentation to the city council on Wednesday. They include:
- St. Paul Public Works would cut $1.9 million from its budget, resulting in part in a smaller mill and overlay program.
- St. Paul Parks and Recreation would slash $1.3 million, in part through reduced hours and operations at rec centers and aquatics facilities, as well as outsourcing concession sales.
- The St. Paul Department of Safety and Inspections would slash $1.1 million, including eight vacant positions: three general inspectors, two fire safety inspectors, two customer service representatives or specialists and a custodian.
- The St. Paul Police Department would cut $800,000 in spending and the St. Paul Fire Department would trim $431,000.
Overall, if the mayor’s budget proposal is approved by the city council in December, general fund spending is projected to drop $8 million, or 2.5 percent next year, from $327.6 million to $319.5 million.
A $19.6 MILLION BUDGET GAP
Entering 2021, the Office of Financial Services has sought to close a $19.6 million city budget gap, which is fueled in part by police and fire labor contracts, rising healthcare costs and shifting some general funds to cover the debt levy.
However, the largest part — $12.9 million — results from COVID-related revenue losses, such as a major drop in sales tax revenue, reduced parking meter proceeds, plummeting hotel taxes and even decreased ambulance runs.
Increases in state aid, reductions in charges to a Technology Innovation Fund, changes to worker’s compensation and the proposed sale of Fire Station 51 will reduce the gap by about $4.5 million.
Another $1.5 million in street mill and overlay costs will be transferred to the city’s $67 million Capital Improvement Budget, which pays for public infrastructure and construction projects. That’s anticipated as a one-time funding shift.
The largest change, however, will have to come from city departments themselves, according to financial services, which is projecting a $12.8 million cut to day-to-day city operations, services and positions.
CITY DEPARTMENT HEADS TO PRESENT COST CUTTING PLANS
Over the coming months, individual department leaders will present their plans for trimming costs to the city council during budget hearings, which are held Wednesday mornings.
Internal city services would account for $2.3 million in reductions, such as eliminating two “Innovation” positions within the Office of Financial Services, a payroll specialist within Human Resources, a second labor specialist within the department of Human Rights and Equal Economic Opportunity, and funding some city attorney services through Planning and Economic Development funds.
Overall, the cuts and funding shifts are expected to both close the $19.6 million gap and free up an additional $1.5 million for reinvestment in some city programs, including parks, technology and libraries.
For instance, water would flow again at the city’s ornamental fountains, which have been turned off for cost-savings during the pandemic.
The library system’s portable WiFi “mobile hotspots” program would be made permanent, and the libraries would make cultural liaisons and a program coordinator into permanent positions.
REVENUE DROPS $8.6 MILLION
As of now, the city’s general fund revenue is projected to drop $8.6 million in 2021.
That includes an added $1.6 million in delinquent property tax payments, a $1.9 million decrease in franchise fees due in large part to a drop in electricity sales, an $896,000 decline in parademic fees as a result of fewer ambulance runs, and a $639,000 drop in hotel tax revenue.
The city projects a $1.7 million drop in interest earnings, a $1 million reduction in parking meter revenue in part due to social distancing and event cancellations, and a $500,000 drop in traffic fines.
At the request of the city attorney’s office, fees related to court continuances for dismissal have changed, fueling a $192,000 drop in fee revenue.
The Department of Safety and Inspections expects a $614,000 drop in business license revenue, and a reduction of $409,000 in fire certificate of occupancy revenue, in part due to DSI vacancies making the work harder to complete. Elevator inspection fees would increase.
On the other hand, while building permits have experienced some softening, they’re expected to produce an added $308,000 next year, largely due to construction at the former Ford site in Highland Park.
Many of the revenue numbers could yet change for the better or for the worse. “There’s a great deal of uncertainty about all of these revenues,” said Earle, noting the Office of Financial Services is monitoring revenue variations closely.
Carter will host a public budget hearing on his proposal at 6 p.m. Thursday, Sept. 3.
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