City Manages Two Years of Budget Deficits; Zero Deficits Projected for 2012-13

Jan. 17, 2012

City Hall Obelisk with StarburstAfter managing through a more than $330 million deficit over the last two years, Phoenix officials announced today that they are projecting no deficit for the upcoming fiscal year.

"Revenues are improving and the city is successfully managing its expenses," said Mayor Greg Stanton.

"Our city is not projecting a deficit for 2012-13, and I am cautiously optimistic about this budget outlook," he said.

Over the past two years, the city overcame a $277 million deficit in fiscal year 2010-11 and a $59 million deficit in 2011-12.  

"It is quite incredible what we have been able to accomplish over the last couple of years," said City Manager David Cavazos.

"By working with the Mayor and City Council, employees and the community, we have reduced the deficit to zero, while continuing to provide outstanding services to the public."

Many factors have contributed to the city's financial stability, including:

  • Innovation and Efficiency savings of more than $40 million by streamlining the organization and reducing the workforce by 2,500 positions, resulting in the smallest number of employees per capita in 40 years (10.3 employees per 1,000 residents).
  • Maintaining the city's AAA bond rating despite the economic downturn, allowing the city to use its good credit to refinance debt, saving more than $44 million in General Fund debt service payments.
  • Increasing the contingency, or rainy day fund, to the highest level in the city's history, with nearly $36 million, or 3.4% of the city's General Fund operating budget.
  • Maintaining the property tax rate at $1.82, resulting in a savings for Phoenix residents of $121 million over three years.
  • Consolidating departments and functions of the city, such as combining the Planning,  Development Services and Historic Preservation departments into one department – the Planning and Development Department.
  • Reducing twice as many managers as general staff positions (management positions have been reduced by 22%, all other employees reduced by 11%).
  • Reducing management layers and increasing the span of control ratio from 1 manager for every 5.3 employees to 1 for every 8 employees.

"I commend city management for taking the council's direction very seriously and developing creative ways to address the deficit.  I look forward to continued discussion and even more savings and efficiencies identified and implemented during the coming year," said Councilman Bill Gates, chairman of the City Council Finance, Efficiency and Innovation Subcommittee.

The City Council will receive a briefing on the budget at its meeting at 2:30 p.m. Tuesday, Jan. 24.  After the meeting, the public process begins, with 15 public meetings conducted throughout the city in April and several more City Council meetings to discuss the budget prior to it being adopted.
 

Media Contact:

Toni Maccarone 602-495-5901