December 29, 2009

City Manager Mike Letcher proposed a 2 percent tax on renters Monday to avoid laying off police officers and firefighters, and to help balance this year's $32 million budget deficit.

The 2 percent tax on renters, which he calls a "landlord" tax, would end if Tucson voters ever pass property-tax increases.

The rental tax would add 2 percent to the bill for all renters, equal to $10 for a $500-a-month rental, or an extra $16 a month for an $800 rental. Although the city is calling it a "landlord" tax, landlords almost certainly would pass the tax on to their renters.

The renters' tax would generate $3.5 million from January through June, and another $10 million in fiscal year 2011, which begins July 1.

Although no current commissioned police officers and firefighters would lose their jobs, 74 vacant police officer positions would be dropped over the next two years, and at least 90 more police positions would be eliminated through attrition.

That would leave the Police Department with between 160 and 180 officers down from current levels, with 30 noncommissioned personnel being laid off as well.

Three fire engines would be shut down over the next two years, and 55 firefighters would leave through attrition and would not be replaced. Another 13 noncommissioned Fire Department employees would be laid off.

Citywide, 89 full-time city employees would be laid off, and another 29 part-time employees would be cut. The layoffs would occur near the end of February, Letcher said.

The cuts are needed because the city's fiscal position is the worst it has ever been, Letcher said, except possibly during the Great Depression.

"Whose fault is it? The economy," Letcher said, noting the city's financial woes are not the fault of the City Council or previous City Manager Mike Hein. "There's really no end in site."

City employees would take a 3 percent pay cut in 2010 and 2011, and would pay substantially more — between 25 percent and 50 percent more — for medical benefits.

Those making under $60,000 would see a 25 percent rise in benefit expenses, while those making more would see a 50 percent increase. Police and fire employees would see an increase of 27.5 percent.

Letcher also announced Monday that the Ormsby Recreation Center could be closed.

Fourteen of the city's 24 swimming pools would be shut down over the summer. That would leave only 10 of the city's 27 pools open next summer, because three were closed last year.

The city also would end its graffiti-abatement program through June 30.

In addition, the budget would be balanced by:

• Cutting outside agencies by 20 percent to save $2 million.

• Increasing fees for ambulance service, development services, parks and recreation, business licenses, various court fines and Tucson Convention Center fees to raise $2.3 million.

• Reducing mailings for neighborhood associations and support to them.

• Restructuring debt to save $1.5 million.

• Not paying $5.3 million to the city's rainy-day fund and self-insurance fund.

Even with the tax on renters and all of the other cuts Letcher proposes, the city still would have an $800,000 deficit this year.

For next year, the city would still be facing a $20 million deficit with the renters' tax and all the cuts, and a $30 million deficit without the rental tax.

Without the rental tax this year, the city would have a $4.3 million deficit under Letcher's plan, which the police and fire chiefs said would devastate their departments. Both framed it as a rental tax versus police and fire layoffs.

Between 160 and 180 active police officers could be laid off "if we don't get that landlord tax," Police Chief Roberto Villaseñor said. Attrition and cuts to vacant positions will still hurt services, but Villaseñor said the rental tax "allows us to go forward without laying off any of my current police officers."

Under Letcher's plan, all current firefighters will stay on, including the class that just graduated from the fire academy, Fire Chief Patrick Kelly said.

Without the rental tax, Kelly said that between 100 and 120 firefighters will have to be cut.

"That would mean closing fire stations," Kelly said, if there's no tax on renters. "We'd have no other choice."

ALMOST making up THE CITY'S $32M DEFICIT:

$2.3 million in fee increases

$3.5 million in renters' tax

$11 million in layoffs, cutting vacant positions, employee attrition

$4.1 million in cuts to employee salaries and benefits

$3.7 million not transferred to rainy-day fund

$ 1.6 million not transferred to self-insurance fund

$1 million in mass-transit cost savings

$1.5 million in debt restructuring

$2 million from a 20 percent cut to outside agencies

$500,000 in water and garbage fee increases to fund low-income subsidy

Total: $31.2 million

Remaining deficit: $800,000

Click here for a detailed look at how the city budget works.

Contact reporter Rob O'Dell at 573-4346 or rodell@azstarnet.com