Raleigh, Wake expect cuts to offset deficits

Last year, Raleigh eliminated 85 vacant positions, capped merit raises, delayed replacing vehicles and restricted travel to pass a budget without raising taxes.

City Manager Russell Allen told the City Council on Monday that those cuts and growing insurance, fuel and retirement plan costs will make it more difficult to balance this year's budget and the 2010-11 budget.

Although property tax revenue in Raleigh is slightly ahead of projections for the 2009-10 fiscal year, which ends in June, sales tax revenue is about $7.2 million below forecasts, Allen said. Fees from building permits and facility rentals have also declined in the soft economy, he said.

Allen has forecast a $6 million to $8 million deficit for the 2010-11 fiscal year. Options to balance the budget could include eliminating more vacant positions, again limiting raises for city workers, raising vehicle fees by $5 and reducing some services, such as leaf collection and park and road maintenance.

"In good times, there are increased revenues, so it's much easier to close those gaps," Mayor Charles Meeker said. "In tough times like this, what you really look at is cutting back your small capital projects that don't affect the quality of life, and positions outside of public safety are often left vacant."

One such recent cut was the city eliminating its $20,000 in support for Raleigh's annual St. Patrick's Day parade, which was held downtown on Saturday.

"Discretionary items like parades, although very important to our community, you will see that being trimmed back," Meeker said.

Community sponsors stepped in to fill the financial gap, and police officers pitched in their time for the parade.

Sales taxes and local fees also are down for Wake County, County Manager David Cooke told the Board of Commissioners on Monday.

About $6.5 million needs to be cut to balance the 2009-10 budget, Cooke said. The projected deficit for 2010-11 could reach $22 million, up from a forecast two months ago of an $18 million gap.

"The first part is good, the second part is bad, and the third part is ugly," he said of his economic update.

The good part is $53 million in construction savings on a jail annex on Hammond Road and the new Justice Center downtown. The county also plans to sell $125.8 million in bonds Tuesday for public school and Wake Technical Community College construction projects.

Departments have been asked to identify cuts in their budgets of up to 7 percent. Layoffs are possible, and the county might close a library in Garner.

A Durham spokeswoman said Tuesday that the city expected a shortfall of about $13 million, mostly in payments on prior commitments like projects built with bond money, positions that were only funded for part of 2009-10 and increasing costs of employee benefits.

"Many sources of revenue are below expectations," Beverly Thompson, the director of the Office of Public Affairs, said in a statement.