Baltimore intends to deal with a projected $103 million budget shortfall in the next fiscal year by reshuffling police and fire services, seeking pay freezes for city employees and streamlining development incentives.
City budget officials presented details of a new budget for the coming fiscal year to the Board of Estimates on Wednesday. That budget reflects a sharp turn in the city finances and tries to compensate for a projected revenue loss of $103 million as a result of the COVID-19 outbreak.
“This is not the budget I expected to present tomorrow. However, I believe it’s a realistic and responsible plan,” Mayor Bernard C. “Jack” Young said on a conference call with reporters.
Among the ways Baltimore is attempting to balance its books is by reassigning police officers in some special units. Officers in the mounted and motor units will be reassigned to help fill gaps in areas like patrol.
Those units will remain active for duty during special events and for crowd control, but the officers will no longer serve in those units full time. Police will also reduce the flight time of its aviation unit from 16 to 12 hours a day. Combined, those actions are expected to save the city about $3.4 million.
The city, which continues to battle violent crime amid the pandemic, plans to
Baltimore’s fire department will also pull two fire suppression units out of service. Firefighters working on those trucks will be reassigned, and no fire houses will be closed. By taking two fire trucks out of service the city expects to save about $3.6 million.
It’s not been decided which fire suppression units will shutter. The decision, however, was based on the belief the city has adequate coverage to fight fires and needed all available ambulance units for responses amid the new coronavirus outbreak.
“No station will be going dark,” Budget Director Bob Cenname said.
Young’s administration has also asked unions to accept pay freezes, or possibly furloughs, in a bid to avoid layoffs. City Hall has also decided to yank funding for half of the 240 open city jobs, a move that saves $15.4 million.
Amid the mayor’s other price-cutting measures is the introduction of legislation to restructure certain tax credits that serve as development incentives.
Baltimore has been examining ways to overhaul development incentives, which currently reduce city revenues by about $115 million a year.
Details about what will be changed were not immediately available because it will requiring the City Council to pass legislation. Reforms to certain city tax credits, however, are expected to improve revenues by about $2 million in the coming fiscal year.
City Hall also will slash Visit Baltimore’s budget by about $5.2 million. That cut, city officials said, is mandated by the state law that ties the agency’s budget to hotel tax revenue.
“There was no way we could avoid making some significant budget reductions,” Cenname said.
Baltimore’s budget reduces spending by $34.3 million from the current fiscal year’s budget, and represents the rare time in city finances when year-over-year spending declines.
During the recession following the 2008 financial meltdown, according to budget officials, the city only had one year-over-year spending decline.
City officials previously presented a preliminary budget to Baltimore spending board. But budget officials acknowledged those figures were irrelevant because of COVID-19’s impact on city coffers.
The city took a month to cobble together a revised budget for the coming fiscal year, which starts July 1. Budget officials said there’s still a significant amount of uncertainty because there’s no equivalent situation to compare with the impact of the COVID-19 outbreak.
Projecting a loss of $103 million in revenue is based on stringent restrictions on business operations remaining through the first quarter of the fiscal year 2021 budget.
Baltimore’s budget woes, so far, stem from the disease’s impact on major revenue streams, particularly in terms of income tax.
About 8% of city jobs are tied to hospitality and related industries like sports and gambling. Another 12% are in trades, transportation and utilities. Those sectors are particularly hard hit and income tax revenues are anticipated to fall by $25 million.
The city also derives significant revenue from tourism, which the spread of COVID-19 has all but eliminated. The loss of hotel taxes, convention center events, admission and amusement, combined with ancillary revenue streams, such as parking taxes, look to cost Baltimore about $40 million.