St. Paul's likely budget gap: $13 million
Let's do it again.
After two straight years of difficult budget-gap belt-tightening, St. Paul officials have to take on the task once more.
This time, city finance chief Matt Smith is projecting — assuming no new spending initiatives — a $13.1 million gap for 2009. Smith will take that message to City Council members at a briefing today, as the city begins its annual budget planning.
Revenues are projected to be down $5.2 million. Costs — consisting of negotiated salary increases, inflation, projected health care and pension contributions — are projected to be up $7.7 million, Smith said.
Tax increases, service cuts, fee hikes, hiring freezes and personnel reductions — they're all on the table, at this point, a spokesman for Mayor Chris Coleman said.
But City Hall officials cautioned that it's too early to start speculating on specifics; the annual process has just begun.
Coleman last week sent department directors, now drafting their initial requests, his annual list of principles, which are consistent with those he instituted when he took office: Look for ways to absorb inflationary increases, don't ask for increases and look for "solutions."
In general, Coleman and Smith have tried to implement a multi-year strategy to eliminate the annual budget gap by 2010. Part of that strategy is to have some cuts and some revenue increases but not just one or the other.
The good news for homeowners, Smith said, is that early state projections show the property tax burden shifting from the tanking residential real estate market to the not-so-bad commercial real estate market. So if city leaders opt for a levy increase, it won't hit residents as hard as in years past. Of course, that's bad news for commercial real estate owners.
Last year, the City Council approved Coleman's 15.1 percent property tax hike — one of the largest in the city's history — to close a $17 million gap. The financing plan also included closing several recreation centers.
Coleman will submit his proposed budget to the City Council this summer.
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